NEW DELHI – India's ambitious Bharat Maritime Insurance Pool (BMIP), launched with a substantial $1.4-billion sovereign guarantee, is encountering significant resistance from the Indian National Shipowners’ Association (INSA). The BMIP aims to provide comprehensive coverage including hull, cargo, Protection and Indemnity (P&I), and war-risk insurance to safeguard India's maritime sector from global market volatility.
However, INSA is pushing back against any mandate that would compel domestic shipping companies to procure P&I insurance solely from an Indian entity. Anil Devli, CEO of INSA, warned that such a requirement could have dire consequences for Indian shipowners.
Concerns Over Cost and Coverage
Devli highlighted a stark discrepancy in pricing, stating, “One of our members sought a quote for BMIP cover. We were told that it is 27% lower than the market. I want to tell you that the quote we have got is 70% more than what we got in London.” This significant cost difference is a primary point of contention for shipowners accustomed to competitive international rates.
Furthermore, Devli expressed worries about the scope of BMIP’s coverage for larger vessels. He speculated that the pool might be more suitable for inland water transport or coastal shipping, potentially leaving larger ocean-going ships without adequate P&I cover, which could deter their operations.
“It will be disastrous for Indian shipowners. The BMIP will probably be available for inland water transport or coastal, whereas the larger ships will then be left without a P&I cover and people will stop taking out ships,” said Anil Devli, INSA CEO.
Addressing Past Failures and Future Vulnerabilities
Marine law experts suggest that the BMIP should act as a complement to, rather than a replacement for, the established international group of P&I clubs, which collectively insure approximately 87% of the world's ocean-going tonnage. Past attempts to establish indigenous marine insurance structures in India have faltered due to predictable issues such as insufficient capitalization, lack of technical expertise, and institutional pressures.
Gautam Bhatikar of Phoenix Legal noted that the BMIP meaningfully addresses the capitalization challenge through its sovereign guarantee. However, he cautioned that deeper vulnerabilities, particularly concerning underwriting discipline, still persist. The BMIP is considered strategically vital for India's maritime sector given the nation's heavy reliance on sea trade for energy security, commodity imports, and global commerce.