India has launched a $1.5bn guarantee for a maritime insurance pool to shield its shipping sector from disruptions linked to tensions in the Middle East, AFP reports.
The so-called ‘Bharat Maritime Insurance Pool’ will “facilitate continuous maritime insurance coverages”, amid the risk of wars and sanctions, the finance ministry says in a statement.
The pool will cover “war risk for Indian flagged or controlled vessels destined to or starting from India in the context of the current Middle East tensions,” it adds.
Several major reinsurers, who provide vital support to insurers by helping them spread risk, have either withdrawn coverage or sharply raised premiums recently, according to local media reports. Under the latest initiative, policies will be issued by member insurers using the combined underwriting capacity of the pool.
Claims up to $100 million will be met from the pool’s own resources. For larger claims, the sovereign guarantee will serve as a backstop after reserves and reinsurance are exhausted.
“The pool will enable the country to strengthen sovereign control over maritime trade and ensure continuity of trade even in the event of withdrawal of reinsurance coverage due to sanctions or geopolitical tension,” the government says.
