Insurance News

russia: India’s general insurers eye bigger marine pool for Russia shipments


India’s general insurers are looking to set up a larger marine insurance pool to cover the risks of transporting crude oil, edible oil, project machinery and fertiliser from the war-torn Russia-Ukraine region. This is expected to facilitate trade as the West ratchets up sanctions on Russia.

A senior official said that both the government and the Insurance Regulatory and Development Authority of India (IRDAI) are keen to develop more indigenous capacity for maritime insurance risk.

Last year, general insurance companies led by state-run reinsurer GIC Re had set up a cargo pool for fertiliser imports with a net capacity of over ₹500 crore. That pool did not generate any losses, which has encouraged insurers to explore more capacity and better rates. “While the cargo pool has performed well, the ongoing war has exposed other shipments to vulnerability as foreign insurers are unwilling to take the risk because of the sanctions imposed,” said the official.

The state-run general insurance companies are expected to launch the pool that other private players can join later.

An insurance pool is an arrangement among several insurance companies for a specific cover when the risks are seen as being too high for a single insurer.

The official said there is an increased demand for insurance cover as India-Russia trade has seen a quantum jump. In FY23, India’s imports from Russia till December touched $32.81 billion against $9.86 billion in FY22 and $5.48 billion in FY21. The US and its allies have barred their shippers, financiers and insurers from backing any trade in Russian oil with prices exceeding $60 per barrel.

ET reported on Monday that while the price cap has yet to dent Russian oil imports, it is getting harder for Indian refiners to pay for Russian oil. They are trying to make payments in UAE’s dirham and Russian ruble for oil purchases above the price cap.”At present, most shipments are insured by the suppliers, but going forward, we may need to develop our own capacities,” the official said. “We are assessing the current needs and are in discussion with all stakeholders.”



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