Why shipowners are resisting Bharat Maritime Insurance plan

The Bharat Maritime Insurance Pool (BMIP) has been launched with a $1.4-billion sovereign guarantee to offer hull and cargo insurance, Protection and Indemnity (P&I) cover and war-risk protection. But the Indian National Shipowners’ Association (INSA) says domestic shipping companies should not be forced to buy P&I insurance from an Indian entity, warning that such a mandate could have serious consequences.

“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 INSA CEO Anil Devli.

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Devli also flagged the cost of BMIP cover. “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,” Devli said.

Marine law experts say BMIP should complement, not replace, the international group of P&I clubs, which provide marine liability cover to 87% of the world’s ocean-going tonnage. Earlier attempts to build indigenous marine insurance structures have failed to take off.

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Those efforts “foundered for reasons that were, in retrospect, structurally predictable: inadequate capitalisation, insufficient technical expertise and an institutional framework that proved unable to resist the pressures that inevitably bear down on state-backed financial entities,” said Gautam Bhatikar of Phoenix Legal.

Bhatikar said BMIP meaningfully addresses the capitalisation challenge through the sovereign guarantee. But deeper vulnerabilities remain, especially around underwriting discipline.

BMIP is seen as strategically important for India’s maritime sector, given the country’s heavy dependence on sea trade for energy security, commodity imports and global commerce.