India is considering the creation of a ₹1,000 crore war risk insurance fund to safeguard maritime trade and shipping operations amid rising geopolitical tensions around the Strait of Hormuz. The proposal reflects growing concerns over potential disruptions to critical shipping routes and the need to ensure continuity of trade.
The initiative aims to provide financial protection to Indian shipping companies against heightened war-related risks, including attacks, blockades, or disruptions in high-risk maritime zones. The Strait of Hormuz, a vital global energy corridor, has witnessed increased geopolitical uncertainty, raising insurance costs and operational risks for vessels passing through the region.
According to the report, the proposed fund would help stabilise insurance premiums and ensure that Indian vessels continue operations without facing prohibitive war risk cover costs. It is expected to function as a backstop mechanism, supporting insurers and shipping companies in managing extreme risk scenarios.
The move highlights the increasing intersection of geopolitical risk and insurance mechanisms. As global trade routes become vulnerable to conflict-related disruptions, governments and regulators are exploring innovative risk-sharing arrangements to maintain economic stability.
From a risk management perspective, the proposal underscores the importance of preparedness for low-frequency but high-impact events. War risk insurance plays a crucial role in mitigating financial exposure and ensuring resilience in the shipping and logistics sector.
The development reflects a proactive approach to managing external risks, ensuring that India’s trade flows remain protected in an increasingly uncertain global environment.
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