Insurers seal deal to cover Iran’s oil cargoes
Reports say global ship insurers plan to resume near full coverage for Iranian oil exports from next month without involving US-domiciled reinsurers.
Reuters in an exclusive report said the insurers had reached a deal to the same effect, adding the mechanism would be effective as of next month.
The reluctance of US firms to handle Iranian goods had greatly limited the number of reinsurers of cargoes, added the report. Nevertheless, the new arrangements – which essentially allow re-insurance of ships without the involvement of US-firms – should boost the number of eligible shipments, it wrote.
This could provide a boon to Iran, trying to raise oil exports after most sanctions were lifted last year, though banking restrictions that remain in place that could cap any major rise in exports.
“There will be no US-domiciled reinsurer participation on the 2017 IG reinsurance program,” Andrew Bardot, secretary and executive officer at the International Group (IG) of P&I Clubs
in London told Reuters.
The new arrangements take effect on 20 February 2017, he and other officials said.
“This will substantially address the potential shortfall in reinsurance recoveries in the event of Iranian-related claims,” Bardot added.
Reuters reported last July that international shipowners were still reluctant to handle Iranian oil due to the remaining US sanctions on Iran.
This, it said, had made the country struggle with its oil export plans. However, signs of improvement appeared later when shippers started to use an insurance mechanism that envisaged interim, limited, insurance cover by “P&I clubs” – maritime mutual associations that provide “protection and indemnity” insurance to shippers.
The mechanism became effective from last April after the International Group of P&I Clubs – which represents the world’s top 13 ship insurers – increased the amount covered by so-called “fall-back” shipping insurance from €70 million to €100 million ($113.36 million).