Ministries meet to put a cover on ships in war zone

Mumbai: Some key ministries, including shipping and finance, met on Friday to firm up a sovereign-backed insurance mechanism, even as general insurers and reinsurers pool together $100 million (about ₹930 crore) of capacity for a Bharat Marine Pool to cover vessels sailing through war zones.

Indian general insurers, led by state-owned GIC Re and New India Assurance, have stitched up the initial $100 million pool that will serve as the first layer of protection against war-related risks in critical shipping routes such as the Persian Gulf.

The proposal is to have a layered structure. The industry-backed pool will act as the first line of risk absorption, with capacity from domestic insurers to cover losses arising from conflict-related disruptions on the lines of India's existing terrorism and nuclear insurance pools. ET was the first to report on March 19 that India is considering a ₹1,000 crore war-risk insurance fund to support shipping through conflict-hit West Asian routes.


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Once this layer is exhausted, a sovereign guarantee is expected to kick in as a backstop. Government support, estimated at around $1.5 billion, would provide additional comfort to insurers underwriting high-risk voyages in the region.

"The idea is to first build a pool with contributions from insurers, and then have a sovereign guarantee sitting on top of it," said a person familiar with the discussions, who did not wish to be identified.

A committee comprising secretaries from multiple ministries has been formed to steer the framework, with participation from the insurance regulator and industry bodies. State-run reinsurer GIC Re is likely to manage the pool, similar to its role in other sector-wide risk-sharing mechanisms.

The move comes as war-related risks in key shipping corridors have intensified amid ongoing tensions in West Asia, pushing up premiums for both hull and cargo insurance. While global reinsurers remain involved, capacity constraints and pricing pressures have made coverage increasingly expensive and, in some cases, difficult to access.

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Unlike earlier pools such as terrorism cover, designed largely to stabilise pricing and availability, this structure is aimed at safeguarding international trade flows. "This is fundamentally different because it is linked to global trade disruption. Hull, cargo, everything is impacted," the person said.

Discussions are in progress, and once finalised, the mechanism is expected to provide a crucial safety net for shipping operators navigating one of the world's most sensitive maritime corridors.