Insurers sound alarm over Iran ship insurance
Singapore, January 30, 2014
A group of insurers warned shipowners this week to be careful when signing deals to carry Iranian oil because the US has not been able to clarify whether insurance claims will be paid after the suspension of sanctions ends in July.
Sanctions on ships carrying Iranian oil were eased on Jan. 20 for six months as part of a deal between Tehran and six world powers including the United States, Russia and Germany. The deal suspended some of the measures put in place since early 2012 in exchange for Iran curtailing its nuclear programme.
The easing of the insurance sanctions for ships has been expected by analysts to increase Iran's crude oil exports, although data from Tehran's largest customers - China, India, Japan and South Korea - has so far shown steady to lower shipments since the deal was signed in November.
Uncertainty over post-July insurance payments, however, has made the suspension of sanctions on ship cover "of very limited, if any, value to shipowners," the group of shipping insurers said in a note this week.
The International Group of P&I Clubs said it was uncertain if insurance claims that arose while sanctions are eased would be honoured if they remained unpaid after July 20.
The International Group has been in talks with the U.S. Office of Foreign Assets Control but OFAC has not been able to confirm whether payments for claims could be made after July 20 when sanctions could possibly be reimposed, the group said.
"Members should proceed on the basis that beyond 20 July 2014 (or any extension of the initial six-month period), clubs will not be able to respond to any claims presented in respect of liabilities arising during the 20 January-20 July suspension period," the group said in its note.
The International Group represents 13 mutual protection and indemnity (P&I) clubs which cover about 90 per cent of the world's ocean-going ships against claims for pollution, injury and cargo damage.
P&I claims can take one or two years to settle, said a Japan P&I Club official. If claims cannot be settled within six months it would be similar to having no insurance, he said.
He said owners of Japanese ships importing Iranian crude oil are staying with Tokyo's sovereign insurance scheme put in place in mid-2012 to keep the oil shipments flowing, and none have moved to get cover from the Japan P&I Club.
Shipowners "are strongly recommended not to enter into contracts for transportation of crude oil, petroleum oil and petrochemical products" without consulting their individual P&I insurers, the International Group said.
It would continue to talk to the U.S. to clarify the insurance issue, it added. – Reuters
More Finance & Capital Market Stories
- Saudi can achieve 4.4pc growth this year
- Emaar listing of retail unit 'within months'
- Dubai Investments nets $29m profits
- Compliance officers facing diverse pressures, says study
- Abu Dhabi finance dept inks deal with Ajman
- Kuwait registers 8pc credit growth
- Bahrain Sico funds net solid returns
- Emaar proposes 15pc cash dividends
- ABG units win top Islamic finance award
- Finance House approves 25pc cash dividends
- Qatar 'most expensive country in Gulf'
- Egypt regulator sets rules for index
- Dubai Islamic eyes Kenya, Indonesia for expansion
- ADCB to buy back 3pc of its shares
- GCC insurance growth outpaces developed markets
- Bahrain 'faces budget deficit, inflation challenges'
- Global Payment Services wins key certification
- BBK unveils big India expansion plans
- Kuwait GDP growth to hit 3.5pc in 2014
- Gulf shares tumble over EM exposure cut
- GCC bonds to gain from macro-economic climate
- French Business Council Dubai members up 18pc
- Egypt economy growth seen less strong than thought
- Sharjah approves $4.2bn budget for 2014
- Saudi non-oil sector posts solid growth in Feb
- Seera total income rises to $34m
- NBAD approves 40pc cash dividends
- NBAD sees 8-10pc loan growth
- Al Basel Group launches investment arm
- Union Insurance posts $18m profit