The government along with some insurance companies are planning to pump in a total amount of around $2 billion as reinsurance funds to cover Indian vessels passing through the war hit zone of West Asia, said sources from the government, who are aware of the matter. While the Centre is likely to create a $1.5 billion-fund, other insurance companies will contribute around $300-500 million to the reinsurance funds.
“The government aims to set up a fund of $1.5 billion for reinsurance. The idea is to encourage insurance companies to extend coverage to the Indian vessels sailing in the war-struck waters," said the sources. They mentioned that the funds could minimise India’s dependence on overseas reinsurance and at the same time the Indian insurance companies will get some confidence to continue providing coverage.
Due to the ongoing West Asia crisis, the insurance premiums for the vessels have gone up considerably and with this reinsurance fund, the government aims to support the insurance companies and the freighters to manage the rising cost.
As reported in media, marine insurance premiums are up by nearly 80%, with insurers reassessing war-risk premiums depending on the risk exposure and some international maritime insurers have even withdrawn marine war-risk coverage for vessels passing through the war zone. Some reports suggest that maritime insurance premiums for war risk in the Gulf have surged, in some cases exceeding 1000% of previous rates, as insurers reevaluate risks in the Strait of Hormuz.
Since the war broke out, the government has launched several measures to aid affected players like the exporters, freighters, shipping companies etc. The Ministry of Commerce and Industry launched the Resilience & Logistics Intervention for Export Facilitation (RELIEF) scheme in March 2026, with a Rs 497 crore outlay, to support exporters impacted by West Asia logistics disruptions. Under the March 2026 RELIEF scheme, the Export Credit Guarantee Corporation (ECGC) acts as the nodal agency to provide enhanced risk coverage for Indian exporters impacted by West Asia logistics disruptions. The scheme ensures up to 100% cover on existing insured shipments and up to 95% for new shipments to the affected region.