London-based International Group of Protection & Indemnity Clubs, the world’s largest pool of reinsurers for oil tankers, is understood to be in talks with the US government to find a way to insure Iranian oil shipments now that sanctions have been mostly lifted.
But the US still maintains several sanctions against Iran, including a ban on dollar transactions, which makes it very difficult for insurers to offer coverage for Iranian oil shipments to Europe. There is also the issue of the American Steamship Owners Mutual Protection and Indemnity Association, also known as the American Club, which is involved in the International Group of Protection & Indemnity Club. With US companies still barred from doing business with Iran, the entire pool is restricted by sanctions.
Last month, the Lloyd’s of London market said its managing agents can offer insurance and reinsurance to Iran for the oil and petroleum transportation, following the lifting of European sanctions.
“From an EU perspective…the transport of Iranian oil and petroleum products and the provision of (re)insurance, including protection and indemnity (P&I) insurance, are permissible (amongst other products in the oil, gas and petrochemical sectors),” said Sean McGovern, chief risk officer & general counsel at Lloyd’s.
“The US has also lifted sanctions on Iran regarding the oil and shipping sectors, although principally this relief targets non-US persons conducting business with Iran. With a few exceptions, the general US trade embargo on Iran remains in place and US persons remain prohibited from conducting most business with Iran,” McGovern added.
One possibility the Club is exploring is to set up a separate reinsurance program for US reinsurers, to remove the effect of sanctions.