India has approved 129.8 billion rupees ($1.4 billion) in guarantees for a marine insurance pool, a minister said on Saturday, as war and sanctions prompt insurers to withdraw cover, threatening trade flows.
Information and Broadcasting Minister Ashwini Vaishnaw said the pool will run for 10 years and can be extended for another five years.
“A domestic marine risk underwriting pool is needed to maintain sovereignty and trade continuity in the event of cancellations of coverage due to sanctions or geopolitical tensions,” a government statement said.
Reuters reported earlier this month that several major reinsurers, including India’s only state-backed reinsurer GIC Re, have either withdrawn coverage or significantly increased premiums, leaving the industry with limited reinsurance support.
Reinsurers provide important support to insurance companies by helping them diversify their risks. Issues that have led the industry to scale back coverage include the war with Iran and Western sanctions on Russia.
The insurance pool will cover all maritime risks, including hull and machinery, cargo and war risks, the statement said.
Member insurance companies will issue policies using their combined underwriting capacity of approximately Rs 950 crore.
Inflation-linked allowance increased
Inflation-linked benefits have also been increased by 2% from January 1, the government said in a separate statement.
Dearness Allowance and Dearness Relief are government-mandated payments designed to offset inflation for employees and pensioners. Subsidies are revised twice a year based on the Consumer Price Index.
Government data earlier this month showed that India’s CPI rose to 3.40% year-on-year in March from 3.21% in February.
While government tax cuts have insulated consumers from the full impact of rising global oil prices, price pressure has increased due to rising cooking gas costs.
(1 USD = 92.5980 Indian Rupees)
(Reporting by CK Nayak in New Delhi and Ashwin Manikandan in Mumbai; Editing by Louise Heavens and Mark Potter)
