The Bharat Maritime Insurance Pool (BMI Pool) comes amid escalated geopolitical risks, which have significantly pushed the average cost of maritime insurance by more than 200%-300%.

Maritime insurance cost is set to remain high even if the US and Iran strike a peace deal, as sources indicate that global uncertainties are gradually becoming a part of daily life. Insurance and risk management firm Lockton has noted that in some extreme cases, insurance cost has risen more than 1,000% as “attacks and security risks intensify.”

Darshan Parikh, Senior Director, Corporate Solutions Group, Lockton, said that “the repricing underway in the insurance market is likely to reflect a deeper structural shift rather than a temporary spike.”

The US-Israel-Iran war and the subsequent choking at the Strait of Hormuz, arguably one of the most key maritime trading routes, has put the spotlight on the need to have control over marine insurance.

For India, with a focus on expanding exports, the requirement and the size of maritime insurance would only surge. At present, India’s marine cargo insurance size is estimated at about US$ 2.20 billion. According to a report (https://www.marknteladvisors.com/research-library/india-maritime-cargo-insurance-market-report.html) by MarkNtel Advisors, the rising value of cargo and diversified trade lanes underpin demand for reliable risk coverage, particularly for commercial exporters and importers navigating complex international logistics.   

Marine insurance cost has been steadily rising over the last few years. Even before the US-Iran war, the uncertainties driven by the Russia-Ukraine war and Israel’s continuous attack over Hamas have had an impact on it.

The surge in marine insurance costs has further dented the bottomlines of Indian exporters. While exporters shoulder the insurance cost related to consignments, shipping lines insure the vessels from other risks.

P&I Club Dominance

Until now, the 200-year-old Protection and Indemnity Club (P&I) has been driven by a handful of 12 International Group (IG) members, covering more than 85% of maritime tonnage. According to IMARC Group, the maritime insurance market worldwide is estimated at around US$ 33-36 billion.

The P&I club undertakes insurance activity through a collective fund for claims and an internal consensus instead of the standard commercial insurance model. Members collectively fund claim payouts while the unused money is returned to members.

P&I insurance is mandatory for all vessels plying — the cover is aimed at providing protection against liability claims which could arise due to damage from collision or environment related issues and even for any injuries caused to the crew. Besides, repatriation of crew members and risks emerging from wars are also covered by the insurance policy.

China has its homegrown maritime insurance policy, which has been revised from 1 May 2026. China, with one of the largest commercial maritime fleets in the world, has managed to carve out flexible insurance plans which help its own flagged vessels.

India’s Own Maritime Insurance Scheme

The newly launched, government backed BMI Pool will help reduce dependence on the exclusive P&I Club and insulate the country’s maritime trade from global risks.

Not only will this provide protection to Indian flagged or controlled vessels but also to those that are either coming into the country or starting from Indian ports.

For India, which is aggressively looking to diversify its trade partners, a domestic marine insurance pool is particularly key with a focus now on port led development. That apart, new trade destinations, especially in South America, Africa, and Australia would mean longer routes.

An official statement (https://www.pib.gov.in/PressReleasePage.aspx?PRID=2253243&reg=3&lang=2) said that it would cover all maritime risks like hull and machinery, cargo, P&I, and war risk. “The pool will help to manage liability insurance locally, tailored to Indian shipping conditions and regulatory requirements, develop specialised marine underwriting, claims management and legal expertise within India,” it said. 

What the Centre needs to do now is this: ensure smooth and immediate implementation of the insurance scheme while creating awareness.

Amid rising global risks, Indian vessels and exporters need the comfort of covering escalating insurance costs and weed out sudden disruptions and surge in pricing.