Iran - Global ship insurers to resume oil coverage
Wednesday, 01 18 2017, Category: Insurance and Reinsurance, Country: Iran
Global shipping insurers have devised a way to ensure nearly full coverage for Iranian oil exports from next month after striking a deal to provide cover without involving U.S.-domiciled reinsurers, officials in Tokyo and London said.
Restrictions on U.S. firms handling Iranian goods had greatly limited the number of reinsurers of cargoes, but the new arrangements - which essentially allow re-insurance of ships without the involvement of U.S. firms - should boost the number of eligible shipments.
That will provide a boon to Iran, which is 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 U.S.-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 on Tuesday.
The new arrangements take effect on Feb. 20, he and other officials said.
"This will substantially address the potential shortfall in reinsurance recoveries in the event of Iranian-related claims," Bardot said in an email.
The sanctions were lifted after a landmark deal in 2015 with world powers that put constraints on Iran's nuclear activities.
But some prior U.S. sanctions remain in place, which had meant U.S. reinsurers could not participate in covering Iranian cargoes.
To plug the shortfall by U.S. insurers, the group of the world's top 13 ship insurers created so-called "fall-back" insurance last year, under which tankers carrying Iranian oil were insured up to around $830 million per ship.
That was below normal coverage for a tanker and risk-averse shippers refrained from lifting cargoes. However, it still allowed Iran to more than double crude exports from as low as about 1 million barrels per day (bpd) at the height of the sanctions. Iran's exports were as high as 3 million bpd before the sanctions.