EghtesadOnline: A total of 77 Iranian ships are now receiving protection and indemnity coverage from Steamship Mutual Underwriting Association Limited denied during the sanctions as the country has managed to become a member of three P&I clubs, says the director of IRISL’s Insurance Brokerage.
"During the sanctions era, covering all potential risks had to be covered by domestic entities and if an incident happened, the government-backed reinsurance fund and local insurers had to bear the costs–an inevitable scenario due to the limitations imposed by sanctions," Mohammad Reza Banaei was quoted as saying by IRISL's website.
However, after the implementation of the nuclear accord in January 2016 and lifting of sanctions, it was decided in coordination with the Central Insurance of Iran that coverage of crises such as oil spill would be assigned to foreign insurers, he added.
"In line with this, IRISL managed to receive coverage from international P&I clubs and become a member of [Oslo-based Assuranceforeningen] Skuld, West of England, and Steamship Mutual," Financial Tribune quoted Banaei as saying.
IRISL had signed a memorandum of understanding with Skuld during a Norwegian trade mission to Tehran in last August, which seems to have borne fruit now.
The West of England is a leading mutual marine insurer providing its worldwide membership of ship owners, charterers and operators with liability insurance and related services.
Incorporated in 1909 and based in London, The Steamship Mutual Underwriting Association Limited offers mutual protection and underwriting services while also providing marine liability insurance.
The 77 insured ships belong to the IRISL and its subsidiary, Valfajr Shipping Company. The first shipping company specialized in passengers and cargo carriage in the Persian Gulf and Oman Sea after the 1979 Islamic Revolution in Iran, Valfajr was established as an independent corporate entity in 1989.
P&I Club Membership
Referring to the presence of IRISL representatives in the international P&I clubs, Banaei noted that the consent of the Steamship board of directors members was a crucial step in this regard.
According to him, in addition to being a member of the club as an insurer, Iran has now a seat on the club's board. That member is Mohammad Saeidi, CEO and chairman of IRISL whose membership is expected to "improve the level of cooperation and interaction with Steamship".
The IRISL official elaborated on the operations of the international P&I clubs, saying 13 such companies cover about 90% of all ships sailing the international waters. The Biggest shipping companies are usually the entities with board members which play a key role in club and policy decisions, he added.
Banaei underscored the importance of Iran's membership with the international P&I clubs which constitute the "biggest reinsurance partnership in the world" giving them the ability to cover billions of dollars in claims.
"At the moment, ships with the IRISL will be covered up to $1 billion for oil spills, but owing to the structure and synergy of the clubs, they can cover damages higher than that ".
The official stressed the role played by the 2015 nuclear accord in allowing the Iranian shipping industry to reignite interaction with international counterparts, saying the free movement of ships and a subsequent development of maritime trade will act as a significant source of income for the country and a driving force for economic prosperity and job creation.
If Iran is limited to dealing with a few countries, he added, it will not be able to achieve its long-term goal of joining the top 10 ship-owning countries.
Steamship Mutual is one of the largest and most diverse P&I Clubs in the world and a member of the International Group of P&I Clubs participating in the International Group Pool.
Before international sanctions hit Iran about eight years ago, the International Group was a key insurer of the Iranian fleet while Steamship Mutual was the P&I Club most favored by Iranian owners. However, the sanctions that mainly targeted the Iranian financial system by way of focusing on Iranian banks also cut off all insurance coverage, effectively ending the relationship with P&I clubs in 2009.
IRISL was also a direct target and the first shipping line to be targeted by sanctions on Iran, with British and US officials claiming the company’s ships had carried cargo that supported the country’s ballistic missile and nuclear program.