Wary Western insurers rebuild business ties with Iran

Reuters

Western insurers are slowly reaching deals with Iran as they seek to re-enter a multi-billion dollar market although the pace of business is hampered by banking restrictions ten months on from the lifting of international sanctions.
Shut out of international financial markets for years, Iran is still trying to reap the benefits of last year’s nuclear deal with world powers. Despite the removal of international banking restrictions in January, Tehran has secured ties with only a limited number of smaller banks as US sanctions remain in force.
By contrast, Iran is in more active talks with insurers to provide cover in a market valued at $9 billion overall last year and potentially double that in the next decade.
Western companies need insurance in order to resume business with Iran. Shipping and trade credit insurance, which remove the risk of non-payment for goods, are the first types of insurance being offered.
“There is generally a lower degree of fear and apprehension and that is because you have not had the big fines on the insurers that the banks have faced,” said leading London sanctions lawyer Nigel Kushner. “We are going to see greater and quicker movement there than on the banking side, at least in London and the UK,” said Kushner, who is also a director of the British Iranian Chamber of Commerce.
As Iran has aimed to ramp up oil exports, securing marine insurance has been crucial. Top tier Western ship insurers have started offering services in recent months.
Iran’s deputy oil minister, Amir Hossein Zamaninia, has said European insurers now have no problems insuring Iranian oil tankers, according to the oil ministry’s news agency SHANA.
Protection and Indemnity (P&I) clubs – marine insurers owned by shipping firms – have started to provide cover for Iran’s shipping fleet, including its oil tankers. Jonathan Andrews, director and head of eastern underwriting with Britain’s Steamship Mutual, said it was insuring ships for Iranian tanker operator NITC and also for Iranian cargo ship operator IRISL.
“We have a long history of insuring Iranian ship owners,” Andrews told Reuters. “We are happy to be insuring our former members again.” Norwegian ship insurer Skuld said it was in discussions with IRISL, while it was already insuring NITC ships.
Others such as the UK’s Standard Club said they were covering vessels trading to and from Iran, but did not say whether this related to Iranian shipping firms. Ship insurers say there are still constraints on payments, given a freeze on using the US financial system.