Source: BL
Subject: Economy
Context: The Union Cabinet has approved the creation of the Bharat Maritime Insurance Pool (BMI pool), backed by a ₹12,980 crore sovereign guarantee, to ensure uninterrupted insurance for Indian vessels.
About Bharat Maritime Insurance Pool (BMI Pool):
What it is?
- The BMI Pool is a domestic, state-backed insurance mechanism designed to provide comprehensive coverage for Indian-flagged, Indian-controlled, or India-bound vessels.
- It serves as a strategic financial shield, ensuring that Indian trade can continue even if international insurers withdraw coverage due to regional conflicts or sanctions.
Organizations Involved:
- Governing Body: A newly constituted body to oversee the formation and daily functioning of the pool.
- Domestic Insurers: Participating insurance companies that will act as Pool Members, utilizing a combined underwriting capacity of approximately ₹950 crore to issue policies.
Aim:
- To eliminate the high dependence of Indian shipping on the International Group of Protection and Indemnity (IGP&I) Club.
- To provide affordable insurance for vessels transiting volatile maritime corridors, preventing spikes in freight and trade costs.
- To maintain sovereign control over maritime trade routes and protect against the impact of international sanctions.
Key Features of the BMI Pool:
- Comprehensive Risk Coverage: Unlike many specialized international funds, the BMI pool covers all major maritime risks, including:
- Hull and Machinery (H&M): Physical damage to the ship.
- Cargo: Protection for the goods being transported.
- Protection and Indemnity (P&I): Third-party liabilities such as oil pollution, wreck removal, cargo damage, and crew injury.
- War Risk: Specialized coverage for vessels operating in conflict zones.
- Sovereign Guarantee: A massive ₹12,980 crore backstop provided by the Government of India, ensuring the pool can meet large-scale claims without insolvency.
- Broad Eligibility: Coverage extends to Indian-flagged vessels, Indian-controlled vessels, and even foreign vessels destined for or starting from Indian ports.
- Local Underwriting: Policies are managed and issued domestically, allowing for terms tailored specifically to Indian shipping conditions and regulatory needs.
- Expertise Development: Aims to cultivate specialized Indian talent in marine underwriting, claims management, and maritime legal expertise.
Significance:
- If international P&I clubs withdraw coverage due to unilateral sanctions the BMI pool ensures Indian energy and trade flows remain unaffected.
- By managing insurance locally, India reduces the significant outflow of foreign exchange currently paid as premiums to international groups.
