New Delhi [India], April 18 (ANI): In a significant decision, the Union Cabinet on Saturday approved the creation of the 'Bharat Maritime Insurance Pool' (BMI pool) with a Rs 12,980 crore sovereign guarantee to ensure uninterrupted maritime insurance coverage amid rising global uncertainties.

Briefing about decisions taken at meeting of 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.

The decision comes amid disruptions in global energy supply chains caused by the conflict in West Asia.

An official release said that there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in the wake of geopolitical tensions.

'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. Further, there is high dependence of Indian vessels on International Group of Protection and Indemnity (IGP&I) Club for 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 release said.

'Accordingly, there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in face of withdrawal of coverage due to sanctions or due to geopolitical tensions,' it said.

The release said the Government has approved formation of 'Bharat Maritime Insurance Pool' (BMI pool) for Indian flagged or controlled vessels or vessels destined to or starting from India, backed by a sovereign guarantee.

The pool would cover all maritime risks like Hull and Machinery, Cargo, P&I and War risk.

The policies will be issued by insurers that are Pool members, using the combined underwriting capacity of the Pool, which would be around Rs.950 crore. The Pool will help to manage liability insurance locally, tailored to Indian shipping conditions and regulatory requirements, develop specialized marine underwriting, claims management and legal expertise within India.

The release said a Governing Body constituted for this pool would oversee the formation and functioning of the pool.

The rationale for providing a sovereign guarantee to the proposed domestic insurance entity is rooted in the objectives of strengthening self-reliance, sanctions resilience and ensuring greater sovereign control, it said. (ANI)