INDIA has approved a $1.4 billion guarantee for a maritime insurance pool, a minister said yesterday, as wars and sanctions prompt insurers to withdraw cover, threatening trade flows.
The pool will run for 10 years and can be extended by a further five years, information and broadcasting minister Ashwini Vaishnaw said.
“There was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in face of withdrawal of coverage due to sanctions or due to geopolitical tensions,” according to a statement issued by the government.
Several major reinsurers including India’s only state-backed reinsurer GIC have either withdrawn cover or sharply raised premiums, leaving the industry with limited reinsurance support, reports said earlier this month.
Reinsurers provide vital support to insurers by helping them spread risk. Among issues leading the industry to scale back coverage are the Iran war and Western sanctions on Russia.
The insurance pool will cover all maritime risks, including hull and machinery, cargo and war risk, the statement said.
Policies will be issued by member insurers using combined underwriting capacity.
The government said in a separate statement that it had also raised inflation-linked allowances by 2 per cent, starting January 1.
Dearness allowance and dearness relief are government-mandated payments designed to offset inflation for employees and pensioners. The allowances are revised twice a year based on the consumer price index.
India’s CPI rose to 3.40pc year-on-year in March from 3.21pc in February, government data showed earlier this month.
&uuid=(email))