The International Group of P&I Clubs (IG) has said the organisation is working hard to find solutions to the challenge that the new US sanctions on Iran will create.
Speaking to IHS Markit at the International Union of Marine Insurance (IUMI) annual conference in Cape Town, Andrew Bardot, the secretary and executive officer of the IG, said the situation was still complex and the IG is seeking legal clarification.
With the United States’ decision to leave the Joint Comprehensive Plan of Action (JCPOA) over Iran, new sanctions will be introduced on 4 November. These will prohibit US firms having any dealings with Iranian businesses.
However, the European Union (EU) and the other signatories to the JCPOA have imposed no sanctions and the EU has implemented a new blocking regulation that may allow firms to take legal action against insurers who adhere to the US sanctions and refuse insurance cover.
“In a way, it has created a catch 22 for marine insurers,” explained Bardot. “Externally, it is the most pressing issue for the group at present, and the blocking legislation adds a new concern for the market should we comply with the US sanctions when they come into force.”
The sanctions will also effect the IG’s reinsurance programme. Previously the US government had prohibited US reinsurers in covering Iranian risks insurers with a US interest but domiciled outside of the United States were not under such restrictions, which allowed the IG to utilise its capacity on its reinsurance programme.
Under the new sanctions those externally domiciled companies will fall under the US sanctions.
“It will have a significant effect,” explained Bardot. “If vessels are legally trading with Iran and they are involved in an event that has Iranian liability issues it could prove a problem in terms of the available reinsurance capacity.”
The IG is an associate member of IUMI and as such is discussing with the hull and cargo markets how best to respond to the problems that the US and EU positions create.
He added the IG is taking legal advice on how best to operate post-4 November, and aside from the sanctions issue the group’s members are in good health.
“We are still operating in a fairly benign claims environment,” he added. “Last year we saw 18–20 group claims, compared to more than 50 in 2006. Tonnage is also increasing, and members are reposting strong results.”
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