By Staff Writer
New US sanctions on Iran will likely stop any insurers from using the Lloyd’s of London IT platform to provide cover for the country, making Iran uninsurable in Europe.
Lloyd’s Chairman Bruce Carnegie-Brown said that sanctions would probably prevent Iran-related cover from being processed via the Lloyd’s platform because it is now partly owned by US firm DXC.He said: “You can do it through Lloyd’s through other settlement mechanisms outside DXC, it’s just more complicated and more expensive to do it that way. There is a bit of an evaluation going on about what business opportunities there are, in any event.”
While a Lloyd’s spokesperson advised that insurance syndicates “consider obtaining legal advice before engaging in Iran-related activities, to assess and mitigate their sanctions risk”.
Many European firms, including insurers, reinsurers, brokers and shipping firms, have already started to wind down their business interests in preparation for the US sanctions which will come into force on November 4.
These sanctions follow the US withdrawal from the Iran nuclear deal in May.
Lloyd ’s of London and other European insurers have covered Iran in the areas of marine, energy, trade since January 2016 after Iran signed the nuclear deal with six world powers in 2015, and the European Union lifted sanctions.
But last month, the US Treasury’s Office of Foreign Assets Control (OFAC) revoked licenses that allowed foreign subsidiaries of US firms to trade with Iran, which includes DXC.
This move will likely cripple the Iranian economy as Iran’s oil exports, which the US wants to shut down, requires marine insurance in order to survive. Iran also needs insurance to upgrade its ageing oil infrastructure, which cannot compete with more modern equipment.
Many insurers have already announced that they will pull out of Iran by November, including Germany’s Allianz, France’s Scor, France’s AXA, Germany’s Munich Re, Swiss Re and European subsidiaries of US firms Gallagher and PartnerRe.
AXA said that it has suspended taking new contracts related to Iran, while Allianz said that it would wind down its minimal Iran-related business, and Scor said that it would not write new contracts or renew existing ones.
Andrew Bardot, executive officer of the International Group of P&I Clubs, said that the sanctions on Iranian port operators could make it “practically impossible for vessels to call at and use Iranian ports”.
European ship classification firms LR, Bureau Veritas and DNV GL said that they were evaluating the implications of the sanctions, but insurers need verification from bodies like these before they can insure ships.
