The Bharat Marine Pool will be managed by GIC Re which along with New India Assurance will be contributing the maximum capacity to the pool. Other insurers ,who are interested, can participate in the new Marine Pool.The General Insurance Council will soon write to other insurers to know their willingness to participate in the pool.
New Delhi:The government and the Indian general insurers, led by state owned GIC Re and New India Assurance, the largest general insurer in the country, have stitched up a $100 million(around Rs 940 crore) Bharat Marine Pool, that would provide cover for vessels that are sailing through war zones.
Any capacity beyond Rs100 million will be covered by a sovereign guarantee from the Indian government.
The Bharat Marine Pool will be managed by the GIC Re which along with NIA will be contributing the maximum capacity to the pool. Other insurers ,who are interested, can participate in the new Marine Pool.
The purpose of Pool could reduce India’s dependence on overseas reinsurance and give insurance companies the comfort they need to continue providing cover as trade flows resume through the region, sources said.
There is an effort to involve PSU oil companies in the Pool but what will be their mode of participation is not very clear currently.
There will not be any monetary contribution from GIC Re and other insurers to create entire corpus of $100 million, which will be generated out of the capacity provided by the participating members of the pool.
The General Insurance Council(GI Council) will soon write to other insurers to know their willingness to participate in the pool.
From the government side, both the Ministry of Shipping and the Department of Financial Services were involved in the discussions with insurers.
Though, the immediate reason for setting up a new Marine Pool is to insure vessels traveling in the Persian Gulf, amidst the Middle East war, that has been posing severe risks to the shipping industry and had pushed up the marine premium significantly, the pool will continue as a permanent stand by platform for any future need at times of war ,irrespective of its use in the ongoing Middle East crisis, after a 15-day ceasefire deal by warring parties has already been announced.
The Middle East conflict began on February 28 when the U.S. and Israel launched attacks on Iran. Tehran has since closed the Strait of Hormuz and struck sites in other countries in the region.
Global re/insurers, including GIC Re, had issued notice of cancellation(NoC) for marine hull and cargo war risk coverage leading to a surge in the re/insurance premiums.
Maritime insurance covers ships and cargo against risks such as accidents, piracy and conflict. War-risk cover is typically excluded from standard policies and must be bought separately, with vessels sailing through conflict zones paying sharply high rates.
In another move,the government has also asked the Gujarat based International Financial Services Authority (IFSCA)to revive its old plans to facilitate a Protection and Indemnity Club( P&I Club) for shipping industry as well as Captives in the GIFT IFSC, India’s sole international financial services centre,
Both P&I Club and Captives were not allowed in the country earlier..
The Department of Financial Services(DFS), recently had written to the IFSCA to go ahead with its earlier plans to develop P&I Club and Captives in its jurisdiction, GIFT-IFSC, after break out of the West Asian geopolitical crisis completely disrupting the Indian shipping industry and supply of oil,liquefied petroleum gas (LPG) and fertilisers to the country.
Currently, GIC Re manages a specialised “Marine Cargo Excluded Territories Pool,” established in 2022 to provide insurance coverage for shipments from high-risk zones like Ukraine, Russia, and Belarus. This pool allows Indian importers to secure insurance for essential goods, including fertilizers, following the withdrawal of global insurers due to war-related sanctions.
The facility primarily covers marine cargo war risks in the Black Sea and Sea of Azov, critical for fertilizer and oil shipments.