 "SHIPS, TRADE, TARIFFS")
The implementation of the US’ reciprocal tariff on India is likely to affect marine and trade risk insurance in the country, potentially leading to higher rates. The US government has currently paused the imposition of the reciprocal tariff for 90 days, giving India a window for negotiations, according to experts.
On April 3, 2025, US President Donald Trump announced a 26 per cent reciprocal tariff on Indian goods exported to the US. According to Trump, the tariff was in response to a 52 per cent tariff imposed by India on imports from the US. However, on April 11, Trump suspended the tariff on several countries, including India, for a 90-day period to allow for negotiations, leaving a 10 per cent additional import tariff on all partners except China.
According to industry experts, if the 26 per cent tariffs are imposed on Indian goods, they are expected to pressure the country’s marine and trade risk insurance.
“There will be some indirect impact from the tariffs on goods exported from India to the US. The insurance covers the value of goods, and if that value increases due to the additional tariffs, the premiums for marine cargo insurance will also rise. The amount payable for claims will also increase. If the tariffs are implemented, marine premiums are likely to increase, assuming the volume of exports remains unchanged,” said Amarnath Saxena, chief technical officer — commercial, Bajaj Allianz General Insurance.
The cumulative value of India’s merchandise exports during 2024-25 (April-March) grew by 0.08 per cent to $437.42 billion, compared to $437.07 billion in 2023-24, according to government data.
Tariffs generally affect trade patterns, which are reliant on trade finance. Trade finance is linked to trade credit insurance. If the tariffs are implemented, trade finance is likely to be affected, leading to increased costs when overseas buyers seek product discounts. This would require exporters to renegotiate deals.
Speaking on the potential impact of the tariffs, an insurance expert said that exporters might also need to explore alternative markets, which could be relatively unstable for their products, costing them more time and effort and exposing them to higher risks. Due to these factors, insurance experts expect an increase in demand for insurance and a rise in claims.
According to an insurance expert, “There will be an increase in demand for insurance, and we have already seen a rise in enquiries. However, we are still evaluating the extent of the impact the tariffs might have once implemented.”
The segments whose exports are primarily dependent on US demand are likely to face margin pressures, cash flow crunches, and potential defaults, increasing risks for trade credit insurers who may face higher claims due to delinquencies, according to a report by Edme Insurance Brokers.
“If claims are paid in foreign currencies, rupee depreciation will widen loss ratios. This is a critical solvency issue for Indian general insurers, especially those already operating with thin underwriting margins,” the report noted.
It also added that the likelihood of increased reinsurance premiums due to uncertainty and the possibility of large conglomerates shifting to self-insurance models to avoid persistent volatility, rising premiums, and narrow coverage.
Premium Pressure
* Marine cargo and trade credit insurance premiums in India may rise if full retaliatory tariffs are implemented
* Increased goods value and risk exposure could drive up claim payouts
* Tariffs may disrupt trade finance, leading to deal renegotiations and increased costs
* Uncertainty may drive up reinsurance premiums; some large firms may consider self-insurance
* Depreciation may worsen loss ratios when claims are settled in foreign currency
