SINGAPORE: A group of insurers warned shipowners this week to be careful when signing deals to carry Iranian oil because the United States has not been able to clarify whether insurance claims will be paid after the suspension of sanctions ends in July.
Sanctions on ships carrying Iranian oil were eased on Jan. 20 for six months as part of a deal between Tehran and six world powers including the United States, Russia and Germany. The deal suspended some of the measures put in place since early 2012 in exchange for Iran curtailing its nuclear program.
The easing of the insurance sanctions for ships has been expected by analysts to increase Iran’s crude oil exports, although data from Tehran’s largest customers – China, India, Japan and South Korea – has so far shown steady to lower shipments since the agreement was signed in November.
Uncertainty over post-July insurance payments, however, has made the suspension of sanctions on ship cover “of very limited, if any, value to shipowners,” the group of shipping insurers said in a note this week.
The International Group of P&I Clubs said it was uncertain if insurance claims that arose while sanctions are eased would be honored if they remained unpaid after July 20.
The International Group has been in talks with the U.S. Office of Foreign Assets Control but OFAC has not been able to confirm whether payments for claims could be made after July 20 when sanctions could possibly be reimposed, the group said.
“Members should proceed on the basis that beyond July 20, 2014, [or any extension of the initial six-month period], clubs will not be able to respond to any claims presented in respect of liabilities arising during the Jan. 20 to July 20 suspension period,” the group said.
The International Group represents 13 mutual protection and indemnity clubs which cover about 90 percent of the world’s ocean-going ships against claims for pollution, injury and cargo damage.
P&I claims can take one or two years to settle, said a Japan P&I Club official.
If claims cannot be settled within six months it would be similar to having no insurance, he added.
He said owners of Japanese ships importing Iranian crude oil are staying with Tokyo’s sovereign insurance scheme put in place in mid-2012 to keep the oil shipments flowing, and none have moved to get cover from the Japan P&I Club.
Shipowners “are strongly recommended not to enter into contracts for transportation of crude oil, petroleum oil and petrochemical products” without consulting their individual P&I insurers, the International Group said.
It would continue to talk to the U.S. to clarify the insurance issue, the group added.