Ongoing trade sanctions on Iran by the US have created a $500m gap in third-party liability insurance and pollution cover for vessels, which will cause a massive leap in reinsurance coverage for tankers carrying Iranian crude.
The International Group of P&I Clubs has created a temporary ‘fall-back’ of $500m in additional coverage per ship carrying Iranian oil at no extra cost to members, the Japan P&I Club said in a circular today.
This will raise the default insurance coverage for tankers carrying Iranian crude to $580m per vessel from $80m previously.
The American trade sanctions prohibit US-domiciled reinsurers from providing cover, which has led to the massive shortfall.
The ‘fall-back’ cover will also protect non-certified liabilities such as collision and damage to property, where the risk rests with members, “but only on the basis that the ‘fall-back’ cover is available/has not been exhausted,” the Japanese club said.
The International Group of P&I Clubs will continue discussions with the US Administration over the next few months, with the aim of securing a formal license to allow US-domiciled reinsurers to participate in Group and Hydra reinsurance programmes, the Japanese club said.
The club noted that “licensing is unlikely to offer a ‘quick fix’ to clubs’ short-term abilities to offer adequate, sustainable and effective insurance cover for their members in relation to liabilities involving Iranian interests”.
The International Group aims to have a permanent solution in place “for 2017 at the latest”, the club continued.