Indian insurance companies have stopped providing insurance cover to goods — mainly crude oil — imported from Iran.
Domestic insurers, including New India Assurance (NIA), United India Insurance (UII) and reinsurer GIC Re confirmed they have stopped providing insurance cover for Iranian cargoes, insurance sector officials said.
“Indian general insurers have stopped giving any cover for Iran oil cargo after May 8 and no existing cover is valid beyond November 4,’’ said an official.
Public sector insurers rely on reinsurance from India’s only reinsurer GIC Re, which in turn depends on reinsurance companies in both Europe and the US to hedge their risk.
European and US reinsurers dominate the global market and are increasingly wary of the risk of breaching sanctions. India is the second-biggest buyer of Iranian crude after China and without insurance coverage to protect their plants, the country’s refineries may have to cut down their imports earlier than anticipated.
“Right now the situation is very strict. (US and European) reinsurers are not giving any cover for Iran related activities,” said a source at GIC. Without the backing of global reinsurers, Indian insurance companies will find it difficult to manage the risk.
Indian oil companies are trying for insurance cover from Iranian firms, insurance officials said. The Centre had recently approved a proposal from Iranian private lender Bank Pasargad to open a branch in Mumbai. The Finance Ministry has conveyed to the Reserve Bank of India that it has no objection to allowing the Tehran-based Bank Pasargad to open its branch in India.
The clearance to the Iranian bank comes amidst the US announcing sanctions and asking other countries to minimise oil purchases from Iran.
The first US sanctions on Iran will start from August 6 and a second set will begin from November 4.
In May, the US said it plans to re-impose some sanctions against Iran starting in August, with full sanctions in place by November, after withdrawing from a 2015 accord with Iran limiting its nuclear programme. Hindustan Petroleum Corp (HPCL) had reportedly cancelled the purchase of an Iranian oil cargo earlier this month after its insurance company refused to provide coverage for the crude because of US sanctions.
According to International Group of P & I Clubs, an umbrella organisation whose members cover 90 per cent of the global tanker fleet against risks including oil spills, the return of sanctions is likely to have “significant ramifications” for maritime trade with Iran.. Those impacts will only become apparent once America’s partners give their own response to Trump’s decision, and when details of how the US measures are implemented are clear.
Source: Indian Express