How ‘Operation Sindoor’ Impacted War Risk Insurance Demand in India?
Updated: 10-05-2025 at 3:31 PM
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In the aftermath of India's assertive military response, Operation Sindoor, to counter cross-border threats, India has seen an encouraging statement of its defence capabilities. Operation Sindoor has provided a boost to national security and a better sense of confidence to its citizens. However, the resulting geopolitical tensions have spurred businesses and individuals to re-evaluate their risk exposures, resulting in a significant spike in interest in war risk insurance cover.
Understanding War Risk Insurance
War risk insurance is a very specific type of insurance that protects you from a financial loss relating to a war event.
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Coverage: War risk insurance is designed to cover your damage related to invasion, insurrection, riot, strike, revolution, military coup and terrorism.
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Typical Exclusions: The vast majority of insurance policies prohibit coverage in the case of a claim related to war and therefore require war risk insurance to cover damage from a full array of perils.
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Use Cases: Due to the nature of businesses such as aviation, marine and logistics, etc, because they engage in high-risk zones or are otherwise exposed to geopolitical instability, they often require this specialised type of business insurance.
Surge In Demand Post Operation Sindoor
The successful execution of Operation Sindoor has led to heightened awareness about potential risks, prompting a surge in demand for war risk insurance.
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Increased Inquiries: Insurance companies across India have reported a significant rise in requests for war risk coverage, particularly for cargo in transit.
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Challenges for Landed Property: Underwriters are exercising caution in providing war risk cover for landed properties due to clauses that exclude events proximate to war.
Implications For Marine And Aviation Sectors
The marine and aviation sectors are particularly vulnerable to geopolitical tensions, leading to increased premiums and stricter coverage terms.
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Rising Premiums: War risk premiums in these sectors are expected to rise if tensions persist.
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Reinsurance Challenges: Reinsurers are closely monitoring the situation, with potential increases in premiums and policy cancellations looming.
Challenges In Obtaining War Risk Coverage
Securing war risk insurance comes with its own set of challenges, especially amidst ongoing conflicts.
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Limited Availability: Due to the high-risk nature, domestic availability of war risk insurance is limited.
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Volatile Pricing: Premiums are highly volatile, influenced by the intensity and duration of conflicts.
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Exclusion Clauses: Many policies have clauses that exclude coverage for events deemed proximate to war, complicating claims.
Conclusion
Operation Sindoor stands as a testament to India's unwavering commitment to national security and its proactive stance against threats. While the operation has fortified the nation's defence, it has also underscored the importance for businesses and individuals to reassess their risk exposures. The surge in demand for war risk insurance reflects a collective move towards preparedness and resilience. As the geopolitical landscape evolves, staying informed and adequately insured becomes paramount.
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