EMEA News
Gard Warns of Shortfalls in P&I Coverage for Tankers Trading with Iran
Gard Monday released a loss prevention circular providing details on protection and indemnity (P&I) insurance coverage, as well as possible coverage shortfalls, in order to assist their members in deciding whether to conduct trade with Iran, as well as other countries which are subject to U.S. sanctions.
"This short fall could apply to liabilities incurred by vessels trading anywhere in the world (if for example a vessel was involved in a collision with an Iranian owned vessel) as well as vessels that trade to/from Iran, and Iranian-owned vessels," explained Gard.
Confusion is reported to have been perpetuated within the tanker market when the U.S. lifted sanctions against Iran, but kept sanctions in place that limit the amount of reinsurance U.S. companies can provide for Iranian ships, generating questions as to whether U.S. companies are able to offer insurance coverage to tankers with Iranian crude.
As a result of the confirmed coverage shortfall, international insurers are said to be working to offer limited coverage in order to complement the lack of U.S. cover, although it remains unclear if the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department will approve of such plans.
"If OFAC do not object to such insurance, this may provide a short term solution, but obtaining such cover is not a straightforward task and because of difficulties associated with market capacity and the likely available limit of such cover, it may be limited to certificated liabilities at this stage," said Gard.
"Any solution, whether on an interim or permanent basis, may take some time to put in place," Gard added in the circular, noting that it will keep its members updated as it works toward a solution with OFAC.
Meanwhile, industry and government officials are reported to have said that Japan, one of Iran's largest oil customers, is likely to avoid loading oil at Iranian ports during the month of March due to the impending expiry at the end of next month of its government provided shipping insurance cover.
In contrast, despite International P&I Club offering only about 85 percent of the normal liability coverage for tankers - approximately $8 billion per ship - European countries are reported to be pressing ahead with Iranian loadings.
In February, Gard issued an alert that both Bahrain and Saudi Arabia had placed a ban on all Iranian-flagged vessels.
