Government backstop to help insurers cover ships transiting conflict-hit West Asian waters.

India Considers ₹21,000 Crore War-Risk Insurance Fund Amid Hormuz Crisis

India is considering setting up a ₹21,000 crore war-risk insurance fund to support domestic insurers providing coverage for ships trading with the country through high-risk zones in West Asia, amid severe disruptions caused by the Iran conflict. According to officials familiar with the deliberations, global reinsurers have withdrawn war-risk cover, sharply increasing costs and complicating cargo movement through critical routes such as the Strait of Hormuz. The proposal under evaluation by the Finance Ministry would serve as a government-backed reinsurance facility, enabling Indian insurers to underwrite vessels transiting conflict-hit waters. Officials said the mechanism could serve as a backstop, similar to the Marine Cargo Excluded Territories Pool established in 2022 following the Russia-Ukraine war. That pool, managed by General Insurance Corporation of India, provides coverage for shipments from sanctioned regions. Authorities noted that a final decision on the new fund’s structure and size will be taken once shipping through the Strait of Hormuz stabilises.