Modi government to announce ₹14,000cr reinsurance fund for these ships

Modi government to announce ₹14,000cr reinsurance fund for these ships

The Indian government is likely to announce a $1.5 billion (approximately ₹14,000 crore) reinsurance fund for Indian vessels sailing through conflict-ridden West Asia.

The General Insurance Corporation of India (GIC) will likely manage the fund, which aims to incentivize insurance companies to provide coverage for these ships.

War risk insurance premiums have skyrocketed by up to 7.5% in recent weeks due to rising tensions in the region.

Fund part of broader support measures for affected sectors

The reinsurance fund is expected to cover only those vessels operating in high-risk areas like the Strait of Hormuz.

This comes as part of a broader effort by the Indian government to support sectors affected by the ongoing Iran war.

The Reserve Bank of India (RBI) and Directorate General of Foreign Trade (DGFT) have already taken measures, with this fund being another step toward mitigating the impact on Indian shipping companies and exporters.

War risk insurance premiums have spiked significantly

War risk insurance premiums for commercial shipping have seen a sharp spike, data from Lloyd's of London shows.

In many high-risk areas, premiums have jumped to 1-1.5% and in some cases even spiked to 3-7.5% of a ship's value.

The severity of the threat environment is reflected in this massive increase in absolute costs.