Tough new U.S. sanctions against Iran are raising concern that the OPEC member’s insurers may not be able to pay Western claims in the event of an accident, but Iran’s main ship insurer said it is confident it would be able to.
The U.S. sanctions bar financial institutions dealing with Iran’s central bank and have sparked concern over how Iranian insurers with state links would be able to pay Western claims.
Privately owned Kish Protection & Indemnity Club, the main insurer for NITC, Iran’s biggest oil tanker fleet which has about 40 ships, relies on state-run Central Insurance of Iran as its reinsurer. Any claim made against it would likely have to go through a sanctioned bank.
That means a U.S. shipping company may not be able to receive insurance payments from Kish P&I if an accident occurs with a NITC tanker, leaving the U.S. firm potentially liable to hundreds of millions of dollars through no fault of its own.
“You cannot say that it’s Kish P&I’s problem because Kish P&I is ready to pay for the loss,” Ansari Dezfouli, the club’s deputy general manager, said in a telephone interview.
“We are doing our best to find a solution, a legal solution … We will succeed in this,” he said, adding that claims could take years to settle while sanctions may only be temporary.
Kish has not faced any claims since it was formed last year.
The United States does provide room for business transactions with sanctioned entities on a case-by-case basis. It was unclear whether insurance claims would receive such an exemption.
While sanctions against hull and machinery insurance may be legitimate because they have an impact on Iranian shipowners, Dezfouli said, sanctions against P&I insurance were unfair because they affect the crew, third parties and the environment.
If an accident should occur, Dezfouli said the club may consider asking a member to pay damages upfront and be reimbursed later.
Although NITC’s fleet does not operate in U.S. waters, they do travel through the same global sea lanes and stop at many of the same foreign ports as U.S. vessels.
“The financial restrictions currently in place in respect of proscribed institutions, organisations and individuals would seem to suggest that receiving payment from such entities would be difficult,” said David Bolomini of the Group of International P&I Clubs, an association of customer-owned ship insurers that covers 95 percent of the world’s tankers.
“However, this is an issue of licensing and enforcement and therefore a matter for the authorities in the member states or states concerned.”
Kish P&I club, which is not a member of the international group, was created by a group of Iranian shipowners shortly after European marine insurers withdrew coverage to NITC due to sanctions. U.S. lawmakers are considering adding NITC to its sanctions list.
The European Union has also imposed tough sanctions banning the transport, purchase and import into Europe of Iranian crude oil and petroleum products and related finance and insurance.
That has forced India and other Asian shipowners dependent on European insurance to look for replacement coverage elsewhere, such as in China, Russia or the Middle East.
Dezfouli said Kish P&I had not been approached by foreign fleets for coverage, but it would like to eventually expand into the Asian market.
(Additional reporting by Randy Fabi; Editing by Robert Birsel)
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