Tagged: insurers, Iran, sanctions

Earlier this year, the President of the United States signed legislation known as the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA).

The sanctions prohibit the trade of petroleum products to Iran and seek to limit the provision of “goods, services, technology, information or support that could directly and significantly facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products including any direct and significant assistance with respect to the construction, modernisation, or repair of petroleum refineries”.

Previous sanctions were limited to contracting with IRISL and utilizing the services of specific named banks in Iran.  These have now been broadened significantly with a view to restricting trade with Iran where such trade may or could support the refined petroleum products industry.

In terms of insurance, the Act does impose sanctions for the provision of insurance to those involved in the sanctioned trades, which is creating a great deal of consideration by the market generally.

The London market Joint Hull Committee recently introduced a new clause which they are seeking to include within all renewals with immediate effect.  The clause, JH2010009, is known as the Sanction Limitation and Exclusion Clause.

This clause confirms that the insurer will neither offer cover nor pay any claims under a policy if by doing so it places the insurer in breach of any sanctions.

Due to the significant penalties, insurers are being overly cautious in their approach to the sanctions and, more importantly, are placing the onus on the Assured to ensure that they are not in breach of the sanctions.

Separately, BIMCO has introduced a sanctions clause for Time Charterparties.  Shipowners are being encouraged to include the new clause in all their charterparties as it allows them to use their judgement as to whether or not to comply with charterer’s orders where to do so may constitute a breach of the sanctions.  This is already having an effect as owners are invoking their right under that clause to avoid trade to Iran.

The International Group of P&I Clubs have issued numerous circulars on the issues arising from the sanctions and we would be pleased to provide copies of these upon request.

For anyone who wishes to discuss their insurance situation with FP Marine Risks, please contact your usual broker or email info@fp-marine.com

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