The `Pool’, which only covers the Cargo and not the Hull, was initiated at the instance of ministry of finance, is already in place this week after receiving due approvals from the insurance regulator IRDAI
Effectively, any claim within Rs 500 crore per shipment of fertliser from Russia, Belarus and Ukraine can be paid directly from the new `Pool’
New Delhi/Mumbai/Hyderabad:
To overcome disruptions caused by the USA and European sanctions on Russia and Belarus, due to the Russian invasion of Ukraine, that have completely restricted any insurance and reinsurance covers for any marine cargo affecting the import and export from these two countries along with Ukraine, India general insurance industry has swiftly formed a Rs 500 crore `Pool’ to provide covers for shipments meant for importing fertilisers from Russia, Belarus and Ukraine.
However, the Pool can only cover the Cargo of the shipment and not the Hull.
The `Pool’, which was initiated at the instance of ministry of finance, is already in place this week after receiving due approvals from the insurance regulator IRDAI within a matter of hours.
Effectively, any claim within Rs 500 crore per shipment of fertlisers from these three countries can be paid directly from the new `Pool’ without any reinsurance supports.
There are indications that the `Pool’ can be extended to cover shipment of cheaper Russian oil also, said MoF sources.
Like two other existing pools, Terrorism Pool and Nuclear Pool, the `Pool’ for fertilizer will be administered by state owned GIC Re and will be participated by all the general insurers which will be doubling their net accounts, means a claim is paid by the insurers without any support from reinsurance, to provide covers to any import from Russia, Belarus, and Ukraine.
With the need of the hour is that the government of India rushes to tie up supplies and ensure adequate availability of fertilisers to the farmers in view of the imminent Kharif season, hectic parleys had taken among concerned ministries-ministry of fertilizers and chemicals,ministry of agriculture and farmers welfare, ministry of finance and General Insurance Council, the official representative body of all domestic general insurers and reinsurers as how to provide insure cover to the cheaper fertilizer shipment from these three countries.
After a few days of intense exchange of views about any possible solutions, finally it was decided to set up the ` Pool’ as any laxity in doing so will adversely affect the nation’s food security in a couple of months.
Soon after Russia had invaded Ukraine and imposition of sanctions by the US and Europe, indian general insurers and state owned reinsurer GIC Re had cancelled all marine covers which were issued for the import and export business from Russia, Belarus and Ukraine that go through Black Sea and Sea of Azuv.
The aggression between Russia and Ukraine has already impacted India’s fertiliser supplies in a big way regarding price and availability.
India, the world’s largest urea importer, also significantly imports phosphatic and potassic fertilisers. The country’s urea imports amount to 8-9 million tonnes per annum, mainly from China, Oman, Ukraine, and Egypt.
Around 2.4 million tonnes of ammonia in India was shipped from Pivdenny port located in Ukraine in 2021. Only 0.15 million comes from Ukraine and the rest from Russia is supplied through Togliatti Azot and Rossosh pipelines.
Around 4 million tonnes a year of potash are fully imported from Canada, Russia, Belarus, Jordan, Lithuania, Israel, and Germany by India.
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