Iran's Main Ship Insurer Will Meet Western Claims, Despite Sanctions

By MarEx 2012-11-20 16:36:00

Iran’s main ship insurer is fighting concerns over whether the OPEC members will be able to pay Western claims in the event of an accident. Kish P&I Club says it is confident it will be able to do so, despite the new U.S. sanctions.

Reuters Africa reports that the U.S. sanctions bar financial institutions dealing with Iran's central bank and have sparked concern over how Iranian insurers with state links would be able to pay Western claims.

Kish Protection & Indemnity Club (Kish P&I), which is privately owned, is the primary insurer for Iran’s biggest oil tanker fleet, NITC. The fleet has about 40 ships and relies on the Central Insurance of Iran as its reinsurer, meaning that most likely any claim against it would have to go through a sanctioned bank. A U.S. shipping company may not be permitted to receiving payment from Kish P&I if an accident does occur, leaving them potentially responsible to millions of dollars in liabilities. NITC's fleet does not operate in U.S. waters, but they do travel through the same global shipping lanes and stop at many of the same foreign ports as U.S. vessels.

Kish has not encountered any claims since its formation last year, but says they are ready to pay for losses. The company is searching for a legal solution to this predicament, as claims can take years to settle while sanctions may be temporary. Reuters again states that the United States does provide room for business transactions with sanctioned entities on a case-by-case basis. It was unclear whether insurance claims would receive such an exemption.

Kish officials believe that the sanctions against P&I insurances are unfair because they impact the crew, third parties and the environment. They may be forced into asking a member to pay damages, and provide reimbursement later, if an accident occurs.

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Kish P&I is not a member of the international group. It was created by Iranian ship owners after European insurers withdrew NITC coverage due to sanctions. NITC may be soon added to the U.S. sanctions list. Indian and Asian ship owners who depend on European insurance are looking for replacement coverage in China, Russia or the Middle East. Kish P&I has not been approached by foreign fleets for coverage, but it would like to eventually expand into the Asian market.