Indian insurers are calling for the retention of the marine insurance pool even as hostilities between the US and Iran have ceased and hopes for normalized trade rise. The Bharat Maritime Insurance Pool (BMIP) was established to provide domestic capacity for marine war risk coverage during the crisis, and insurers believe it should continue to safeguard trade against future geopolitical shocks.
Gradual Normalization of War Risk Cover
According to Deepak Sankar, Head of Commercial Business Distribution at TATA AIG General Insurance Company, insurers do not expect an immediate normalization of war risk cover. "We do not see the normalisation of war risk insurance overnight, following a peace announcement. Even if the Strait is formally reopened, that does not immediately translate into normal shipping activity," he said, adding that vessel movement typically takes months to stabilise as confidence rebuilds among shipowners, charterers and insurers.
Sankar noted that the re-entry of insurers into the Persian Gulf war risk market will be measured and phased, with capacity returning cautiously and pricing remaining firm until there is clear evidence of sustained stability.
Pool as a Permanent Resilience Tool
Sankar stressed that the BMIP should not be viewed as a temporary measure. "Its objectives include ensuring continuity of maritime trade, building resilience against geopolitical shocks and strengthening sovereign control over critical risk pools," he said. He added that the pool must evolve into a credible, well-capitalised and technically sound participant, noting that capacity available only in good times cannot be relied upon during disruptions.
Kunal Khanna, Managing Director - Reinsurance & Global Head of Natural Resources at EDME Insurance Brokers, highlighted the structural vulnerabilities exposed by the recent crisis. "The insurance market has a long memory, and a peace deal is not the same as a stable risk environment," he said. Khanna pointed out the immediate impact of insurance withdrawal during the crisis: "What this crisis demonstrated, starkly, is that insurance can close a strait before a single mine is laid. All twelve P&I Clubs cancelled simultaneously, private war risk cover evaporated within days, and over 150 tankers sat idle waiting for coverage that no longer existed."
He said normalization in the war risk market will be gradual and conditional, with government-backed reinsurance facilities needing to be wound down in an orderly manner as private capacity returns. Khanna noted that some private players have already shown interest in re-entering the war risk segment, but decisions have been deferred until market stability improves over the coming months. He emphasised that the marine war insurance pool remains critical during this transition phase. "It exists for exactly this moment, when conflict recedes but the private market has not yet fully reconstituted itself," he said, adding that shipowners and cargo interests should continue working closely with specialist brokers as risks remain fluid.
Underwriting Discipline and Long-Term Risk Evaluation
Amarnath Saxena, Chief Technical Officer at Bajaj Allianz General Insurance, said the peace agreement is an encouraging step but cautioned against overestimating its immediate impact. He said that while reduced geopolitical tensions could support gradual normalization of war risk assessments and insurance pricing, underwriting decisions are based on long-term risk evaluation rather than single events. Saxena added that insurers and reinsurers will continue to closely monitor developments in the strategically critical Gulf region before making any significant recalibration of exposure. He said the marine insurance pool continues to play an important role in maintaining capacity and continuity of coverage during uncertain periods, strengthening long-term resilience irrespective of short-term developments.
Implications for Trade Finance
For trade finance bankers, CFOs, and treasury professionals, the continuation of the BMIP provides a layer of certainty for marine cargo and hull insurance, especially for shipments transiting the Persian Gulf. The pool ensures that domestic capacity exists to cover war risk, reducing reliance on fickle private markets that can evaporate overnight. As the normalization process takes months, companies involved in trade through the region should maintain close coordination with specialist brokers and monitor the phased return of private capacity. The pool's evolution into a permanent facility could become a model for other nations seeking sovereign risk protection in strategic trade corridors.
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