While the politics behind the nuclear agreement signed by Iran and six world powers remains contentious, marine insurance brokers now have a reason to celebrate: the ban on shipping insurance for Japanese ship-owners has now been lifted with other nations expected to follow suit.
This is a huge mark of progress for the industry, as Japan is one of the biggest purchasers of Iranian crude oil. Reinsurers from across Asia and North America stand to benefit, say experts.
The absence of marine insurance providers was once noted by Reuters as a provision that was “the most effective sanction used by Western nations in 17 years of tightening the screws on Iran’s nuclear program.” Since 90% of oil tanker insurance is supplied by Western countries, key stakeholders struggled to find coverage for ships and their cargo.
The maritime insurance markets form a pool and use reinsurance when policies exceed $8 million, but a “typical supertanker” requires $1 billion in coverage.
Other countries will benefit as well, since Iran’s shipping market is now open for any tanker firms that want access. CNBC reports that Scorpio Tankers and Navios Maritime Acquisition experienced a rise in stock prices, indicating a renewed demand for these ships which will need accompanying coverage. That will accrue to commercial brokers focused on maritime shipping, including those players here in Canada.
Other insurance segments that operate globally may want to look into Iran as well, since the relieved sanctions will provide for a host of business and financial opportunities.
"All of the major banking institutions in the industrial world will try to finance and facilitate increased trade with Iran," Christopher Whalen, senior managing director at Kroll Bond Rating Agency, told CNBC. "It's a big country, (and) they are very Western-focused. Iranians are consumers of everything. You can anticipate anything from industrial equipment to consumer products will definitely be bought, and will definitely be financed."
