Iran Offers to Insure Foreign Ships to Skirt EU Ban

Iran said it would insure any foreign ships that enter its waters, in an effort to skirt a European Union ban on insuring ships carrying Iranian crude that has hampered the country’s oil exports.

“The Islamic Republic of Iran will take all responsibility for insuring any foreign shipping line and any ship that enters Iranian waters,” the Fars news agency on Tuesday quoted Seyyed Ataollah Sadr, the managing director of Iran’s Ports and Maritime Organization, as saying.

“The Islamic Republic of Iran has adopted measures with the cooperation of Iranian insurance companies,” he said.

The EU enacted a ban on July 1 on insurance for tankers carrying Iranian oil, preventing EU insurers and reinsurers from covering tankers carrying Iran’s crude anywhere in the world.

The West has imposed sanctions in an effort to stop Iran’s nuclear program, which it suspects of being aimed at developing a weapon but which Iran insists is peaceful.

European insurers dominate the marine insurance sector, and Iran’s Asian crude buyers have struggled to find a way to replace them. As a result, Iran has seen its oil exports plummet from regular levels seen last year.

The Fars report did not provide details of how the Iranian scheme would work for foreign companies and how insurance would be paid in the event of an accident at sea.

A senior official from Iran’s major tanker operator NITC told Reuters in June that it had secured insurance cover from privately owned Iranian provider Kish P&I, with $1 billion in insurance in the event of a collision or oil spill.

Kish P&I 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. Nevertheless, Kish has said it is confident it would be able to pay Western ship industry claims in the event of accidents.

Japan had completely halted Iranian crude imports in July because of the lack of cover, but last week industry sources said Japanese insurers were expanding their maritime coverage to allow more domestic tankers to transport Iranian crude.

Indian state insurers agreed to provide some cover for ships carrying Iranian crude from this month, but India’s insurance regulator has not yet given its approval. Last month India said it would allow state refiners to import Iranian oil, with Tehran arranging shipping and insurance.

In May, Indian refiner MRPL secured coverage from an Iranian insurer, becoming the first Indian firm known to do so.