P&I clubs raise reinsurance to $580m per tanker for Iranian crude

P&I clubs raise reinsurance to $580m per tanker for Iranian crude

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.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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