Insurers Advocate for Continuation of Marine Insurance Pool Post-Ceasefire
Mumbai: Following the recent cessation of hostilities between the US and Iran, Indian insurers are opting to maintain the marine insurance pool. This decision aims to ensure sufficient domestic capacity to protect trade against future geopolitical disruptions. Insurers and brokers indicate that while easing tensions in the Persian Gulf is a positive step, a return to normalcy in marine war risk insurance will take time.
Gradual Normalization Expected
Deepak Sankar, Head of Commercial Business Distribution at TATA AIG General Insurance Company, stated that immediate normalization of war risk coverage is unlikely. He emphasized that even with a formal peace announcement, normal shipping activity may not resume quickly. Vessel movement typically requires months to stabilize as confidence among shipowners, charterers, and insurers rebuilds. Sankar noted that the re-entry of insurers into the Persian Gulf war risk market will be cautious, with pricing remaining firm until there is clear evidence of stability.
Kunal Khanna, Managing Director at EDME Insurance Brokers, highlighted that the recent crisis revealed structural vulnerabilities in global trade. He pointed out that a peace deal does not equate to a stable risk environment. The crisis demonstrated that insurance can withdraw rapidly, as seen when all twelve P&I Clubs canceled simultaneously, leaving over 150 tankers without coverage. Khanna remarked that normalization in the war risk market will be gradual and conditional, with government-backed reinsurance facilities needing to be unwound as private capacity returns.
Role of the Marine Insurance Pool
Amarnath Saxena, Chief Technical Officer at Bajaj Allianz General Insurance, acknowledged the peace agreement as a positive development but cautioned against overestimating its immediate effects. He noted that while reduced geopolitical tensions could support gradual normalization of war risk assessments, underwriting decisions rely on long-term evaluations. Saxena affirmed that the marine insurance pool remains crucial for maintaining capacity and continuity of coverage during uncertain times.
Marcus Baker, Global Head of Marine, Cargo & Logistics at Marsh, pointed out that key operational details regarding the Strait of Hormuz reopening are still unclear. He stated that the immediate market response will depend on further de-escalation and adherence to the agreement. Baker added that a sustained period without attacks on commercial shipping is necessary for meaningful reductions in insurance costs. Industry participants believe that the experience underscores the importance of domestic risk-bearing capacity, with the Bharat Maritime Insurance Pool expected to play a vital role in ensuring trade continuity as global insurers cautiously re-enter the market.
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