India Insurance Shields Risk

by R. Suryamurthy April 18, 2026

By R. Suryamurthy April 18, 2026 0 comments 2 minutes read

Representative Image.

Against the backdrop of escalating tensions in West Asia and mounting risks around the Strait of Hormuz, the Union Cabinet on Saturday approved the creation of a government-backed ‘Bharat Maritime Insurance Pool’ (BMI Pool) with a sovereign guarantee of Rs 12,980 crore (about $1.55 billion), in a bid to cushion India’s energy lifelines from surging shipping and insurance costs.

The decision, cleared under the leadership of Prime Minister Narendra Modi, comes as freight and insurance premiums for crude oil and liquefied natural gas shipments have risen sharply amid fears of disruption in one of the world’s busiest energy corridors. India, which imports over 80 per cent of its crude requirements, is particularly exposed to volatility in the region.

Government officials said the new domestic insurance pool is aimed at ensuring uninterrupted and affordable maritime coverage for vessels carrying critical energy cargo, even as global insurers turn cautious or hike premiums for ships transiting conflict-prone waters.

The BMI Pool will offer end-to-end coverage—including Hull and Machinery, Cargo, Protection and Indemnity (P&I), and war risk insurance—for Indian-flagged vessels, India-controlled ships, and cargo moving to and from Indian ports. Crucially, it will extend protection even when vessels pass through high-risk zones such as the Strait of Hormuz, where geopolitical tensions have heightened the threat perception for commercial shipping.

In recent months, Indian shipping firms have faced rising dependence on overseas insurers, particularly the International Group of Protection and Indemnity Clubs, for liability cover linked to oil spills, cargo damage, crew risks and collision liabilities. However, sanctions risks and geopolitical uncertainties have exposed vulnerabilities in relying solely on global insurance networks.

By creating a sovereign-backed pool with an initial underwriting capacity of about Rs 950 crore (roughly $113 million), the government aims to localize risk management while stabilizing insurance availability and pricing. Industry observers say the move could help moderate freight rates and ensure smoother supply of crude and gas to Indian refineries, even during periods of heightened regional instability.

A governing body will be set up to oversee the pool’s functioning, with a focus on building domestic expertise in marine underwriting, claims management and maritime law.

The initiative is being positioned as a strategic step towards energy security and economic resilience, allowing India to maintain steady trade flows despite intensifying geopolitical headwinds in West Asia.