India's Insurers Plan $100 Million Marine Insurance Pool Amid Rising West Asia Crisis

Indian general insurers and reinsurers are looking to set up a marine insurance pool worth $100 million to provide war insurance cover to vessels sailing through high-risk zones amid the rising West Asia crisis, which has severely impacted maritime trade globally and Indian exporters. Any additional support for the pool is likely to be offered by the government in the form of sovereign guarantees, sources aware of the development said.The insurance industry is in discussions to provide capacity amounting to 8 per cent of their marine premium collected till February 2026. The pool will be managed by General Insurance Corporation of India (GIC Re), with participation from general insurers underwriting marine business.According to experts, marine insurance does not cover war-related risks, but companies can buy additional war-risk cover. Due to current and potential future unrest, this coverage has become expensive and risky for insurers to offer. The marine insurance pool proposed to be created will be funded by insurers and reinsurers and supported by the government, and would act as a shock absorber in the future as well, spreading large losses across participants. At present, India has a terrorism and nuclear insurance pool against such high-cost risks, managed by GIC Re.Marine insurance premiums have continued to remain elevated owing to the conflict between Iran, the United States and Israel. Consequently, several reinsurers have issued notices of cancellation (NOCs) for vessels passing through the route, including GIC Re. Several shipping companies have either stopped travelling through the route and are exploring alternate routes or have stopped sailing entirely. Experts also said that vessels and cargo transiting the region, which used to purchase additional war cover of around 0.25 per cent before the conflict, have seen premiums rise to 0.5–1 per cent. Despite available capacity, war covers are currently offered only at elevated rates and on a highly restricted basis due to prevailing uncertainty.The ongoing conflict involving Iran has disrupted shipments of about one-fifth of the world’s oil and liquefied natural gas through the strait, affecting the movement of oil and other key goods. Despite the two-week ceasefire that was announced recently, premiums continue to remain on the higher side due to heightened uncertainty.Stephen Rudman, head of marine, Asia, Aon, said, “From an insurance perspective, a two-week ceasefire is insufficient in materially changing risk pricing or an underwriting stance. Additional war risk premiums are driven by forward-looking threat assessments rather than short-term political developments.”“While the announcement may help stabilise sentiment and reduce some near-term volatility, underwriters are likely to treat this as a temporary pause rather than a resolution of geopolitical risk. As such, we would expect continued scrutiny on Gulf transits, with elevated war risk pricing broadly remaining in place until there is clearer evidence of a sustained de-escalation,” Rudman added.