The pool covers all maritime risks such as hull and machinery, cargo and war risks for Indian flagged or controlled vessels or vessels destined to or starting from India, in the context of the current tensions in the West Asia, it said.

Under BMIP, the New India Assurance Co Ltd on Tuesday issued the first policy providing financial protection against war perils while navigating through high-risk war zones, it said.

The policy has been handed over by department of financial services (DFS) secretary M Nagaraju to Hoger Offshore and Marine Pvt Ltd in a ceremony.

Another marine cargo war policy was presented to Vedanta Sterlite Copper Ltd, covering its import of cable wires, the statement said. Policy was also issued to Balrampur Chini Mills Ltd, it added.

BMIP thus ensures insurance cover in high-risk areas or sanctioned environments and facilitate continued shipping operations and critical trade flows. “Due to sanctions, foreign re/insurers can withdraw support for any insurance policy that covers cargo or vessel carrying cargo, from the sanctioned country,” it said.

The pool with sovereign guarantee will be able to provide sufficient underwriting capacity to cover the risks adequately and enable the country to increase sovereign control over maritime trade, it said.

A governing body has been constituted to oversee the functioning of the pool, including approvals regarding the invocation of the sovereign guarantee, the statement said.

“In addition, an Underwriting Committee (UC) responsible for ensuring prudent, consistent and technically sound underwriting of risks ceded to the pool has been formed. GIC Re is the pool administrator, which will submit the returns, details of re-insurance arrangement, and statements on performance of the pool,” it said.

Policies will be issued by domestic insurers that are pool members, using the combined underwriting capacity of the pool. These risks would then be reinsured by all pool members, in proportion to their capacity commitment in the pool, it said.

For claims arising up to $100 million, the pool will service the claim using its own capacity and for claims beyond $100 million, the sovereign guarantee will be invoked to service claims as a contingent backstop of last resort, after complete exhaustion of the pool’s accumulated reserves, member contributions and reinsurance arrangements, it said.

The pool will enable the country to strengthen sovereign control over maritime trade and ensure continuity of trade even in the event of withdrawal of re-insurance coverage due to sanctions or geopolitical tensions. This would strengthen India’s maritime risk protection framework and support secure global trade operations in future, promoting India’s financial sovereignty, it said.