The BNP, that cover all maritime risks like Hull and Machinery, Cargo, P&I and War risk, will have a sovereign guarantee of Rs 12.980 crore which was approved by the government on Apr 18.
New Delhi:The Indian government is launching its first ever $100 million Bharat Marine Pool(BNP), on Tuesday,set up by GIC Re and other general insurers, to reduce dependence on overseas expensive re/insurance triggered by the ongoing West Asian conflict.
The launching ceremony will take place here in the presence of top officials of Department of Financial Services including M Nagaraju,the outgoing secretary of the department and Indian re/insurance industry.
The BNP, that cover all maritime risks like Hull and Machinery, Cargo, P&I and War risk, will have a sovereign guarantee of Rs 12.980 crore which was approved by the government on Apr 18.
The policies will be issued by re/insurers that are pool members, using the combined underwriting capacity of the pool and no contribution of funds are required.
GIC Re , which will manage the pool, is contributing around Rs 400 crore of capacity and rest are coming from the general insurers who will be providing capacity calculated on the basis of 8 per cent of their Marine premium till Feb, 26.
However insurers like NIA, Tata AIG General Insurance, United India Insurance(UII),Oriental Insurance(OIC) are contributing larger capacity than others.
New India is providing almost Rs 100 crore while UII is contributing Rs 75 crore of capacity to the newly established pool.
The Pool will help to manage liability insurance locally, tailored to Indian Shipping conditions and regulatory requirements, develop specialised Marine underwriting, claims management and legal expertise within India.
Further, a Governing Body constituted for this pool would oversee the formation and functioning of the pool.
After the approval by the Union Cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said the pool ensures that Indian trade continues to have access to affordable insurance for vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors.
“Any ship that goes into the ocean has insurance. Insurance is available for many types of activities. There’s basic insurance for damage. Another is for protection and indemnity… A sovereign guarantee fund of approximately Rs 12,980 crore will be created for maritime insurance. It will cover all types of maritime risks, including machinery, cargo, and war. It will be given to Indian-flagged vessels, Indian-controlled vessels, and those with either an origin or destination in India. This will be for a ten-year period, with a five-year extension,” he said.
Currently, there is high dependence of Indian vessels on International Group of Protection and Indemnity (IGP&I) Club for Protection & Indeminity( P&I)insurance covering third-party liabilities like oil pollution liability, wreck removal, cargo damage, crew injury and repatriation, collision liabilities and so on.
The purpose of the new pool, with a substantial capacity, is to provide a permanent platform, which can manage a volatile marine insurance market on a day to day basis with cheaper premiums and reduce dependence on overseas reinsurance capacity, which are either not available or available with unaffordable cost at the time of war-time emergencies.
With increased global volatility and geopolitical instability, maritime trade has been impacted with increased risk of losses for cargo and vessels resulting in increased insurance costs and uncertainty in continuous availability of insurance.