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Insurer Appetite for Iran Trade Still Low
Insurer Appetite for Iran Trade Still Low

Insurer Appetite for Iran Trade Still Low

Insurer Appetite for Iran Trade Still Low

Banks, reinsurers and financial institutions have a much lower appetite for risk with regard to crude oil shipping from Iran than in the pre-sanctions era and this will not change in the near future, according to Mike Salthouse, deputy global claims director of North P&I club.
The headline sanctions on Iran and the Iranian crude trade were lifted almost a year ago on 16 January 2016, but Iranian legal and trade regimes have not regained the status they had before the sanctions were imposed, Argusmedia.com reported.
“There has been a significant reduction in banks and financial institutions’ appetite for risk with regard to business with Iran,” said Salthouse, who is also chairman of the International Group of P&I clubs’ sanctions subcommittee.
P&I clubs are mutual insurers covering liability risks for shipping.
One of the main drivers behind this reduction in appetite is that companies are concerned that the US government will disapprove of them doing business with Iran and this could impact other areas of a company’s business, particularly in the US.
That concern has been underscored by the threat of US president-elect Donald Trump to try to reverse the nuclear power deal done between Iran and the international community that led to the lifting of oil sanctions.
Along with a low appetite for risk among insurers, banks in particular can also be a barrier as the non-nuclear sanctions still in place, coupled with their own reluctance to be involved in Iranian trade and possibly incur fines, mean that payments to and from Iranian companies may not be processed.
“It is one thing for the International Group [of P&I clubs] to provide insurance cover for [Iranian] trades; it is rendered ineffectual if banks obstruct the payment of Iran nexus claims or premiums,” said Salthouse.

 

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