Understanding Marine Insurance Premium Payments: What Currency Should You Use in 2025

Marine insurance is essential for protecting goods in transit but one question that often confuses business owners and exporters is: "In which currency should the premium be paid?" In 2025, with global trade expanding and currency markets fluctuating, understanding the currency rules for premium payment has become more important than ever.

This guide breaks down the factors that influence the choice of currency when paying your marine insurance premium and what Indian businesses should know to stay compliant and cost-effective.






What Determines the Currency for Premium Payment?

Marine insurance premium currency depends on several factors:

  1. Jurisdiction and Regulatory Guidelines
    • In India, the Insurance Regulatory and Development Authority of India (IRDAI) governs how insurers collect premiums. For domestic trade, premiums are generally collected in INR (Indian Rupee).
  2. Type of Trade
    • Domestic Transit Policies (within India): Paid in INR
    • International Trade/Export-Import (EXIM) Policies: May be paid in foreign currency (e.g., USD, EUR) if permitted by the insurer
  3. Currency of Cargo Invoice
    • Often, the currency of the marine insurance premium follows the currency of the trade transaction—especially for CIF (Cost, Insurance, Freight) contracts
  4. Insurer's Terms and Global Network
    • Some global insurers or reinsurers may issue policies in foreign currency, especially if coverage is arranged outside India


INR vs. Foreign Currency: What's Allowed in India?

According to IRDAI guidelines:

  • Premiums for marine policies can be collected in foreign currency only when the coverage pertains to export shipments or international voyages
  • The insurer must be authorized to deal in foreign exchange and comply with FEMA (Foreign Exchange Management Act) norms
  • Exchange rates used must be RBI-referenced on the date of policy issuance

For example, if you're shipping goods from Mumbai to Rotterdam under a CIF agreement billed in Euros, the insurance premium may be billed in EUR, provided the insurer is authorized.


What Indian Exporters Should Watch For

  1. Clarity in Quotation
    • Always ask the insurer to clearly mention the premium currency in the quote
    • Confirm if currency fluctuations will affect premium payable
  2. Invoice Consistency
    • Align the marine insurance invoice currency with your shipment invoice to simplify accounting
  3. Banking & Forex Rules
    • Your bank must allow foreign currency premium payments (usually through a Letter of Credit or wire transfer)
  4. GST Implications
    • GST on insurance premiums is applicable based on the policy issuance location and payer location—even if paid in foreign currency


Best Practices for 2025

  • Choose insurers familiar with international shipping and currency handling
  • Work with brokers or trade consultants if the transaction involves multiple currencies
  • Always retain proof of premium payment currency, conversion rate, and insurer authorization for forex transactions


Summary

In 2025, the currency in which you pay your marine insurance premium depends on trade type, regulatory norms, and contractual terms. While domestic shipments stick to INR, international shipments allow for foreign currency under FEMA and IRDAI compliance. For smooth audits, compliance, and accounting, always clarify the currency terms upfront.

Need help navigating multi-currency insurance for exports? Connect with https://btwimf.com for expert marine insurance support and regulatory guidance.

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