The Department of Financial Services (DFS) under the Ministry of Finance launched the Bharat Maritime Insurance Pool yesterday (12 May) with a total capacity of $1.5 billion and a sovereign guarantee of Rs 12,980 crores (approximately $1.4 billion) to ensure uninterrupted maritime insurance coverage amid escalating Middle East tensions.

DFS Secretary M Nagaraju chaired the event and handed over the first Marine Hull and Machinery War Policy to Hoger Offshore and Marine Private Limited, issued by New India Assurance Company Limited, marking the operational rollout of the insurance mechanism.

The pool covers all maritime risks including Hull and Machinery, Cargo, Protection and Indemnity, and War risks for Indian-flagged or controlled vessels and ships destined to or starting from India.

Policies were also issued to Vedanta Sterlite Copper Limited for cable wire imports and Balrampur Chini Mills Limited.

The initiative comes as foreign insurers and reinsurers increasingly withdraw coverage or sharply raise premiums for vessels operating through volatile maritime corridors affected by sanctions and geopolitical conflicts.

The General Insurance Corporation of India will serve as pool administrator, with domestic insurers issuing policies using the combined underwriting capacity of pool members.

A Governing Body and Underwriting Committee have been constituted to oversee operations, including approvals for invoking the sovereign guarantee.

Claims up to $100 million will be serviced through the pool's own capacity, while claims exceeding that amount will trigger the sovereign guarantee as a contingent backstop after exhausting reserves, member contributions and reinsurance arrangements.

Secretary Nagaraju noted that rising geopolitical tensions have increased maritime insurance premiums by as much as 100 per cent in some cases, affecting the movement of goods and vessels across critical international trade corridors.