New Sanctions on Iran Have Ship Insurers Denying Coverage

By The Maritime Executive 12-21-2010 12:40:24

Just weeks after the United States and the United Nations imposed new sanctions on Iran, Tehran's ability to ship vital goods has been reduced again as some of the world's most largest Western insurance companies cut off Iranian shippers. The U.S. sanctions, which threaten to penalize foreign companies that sell fuel and other refined petroleum products to Iran, have forced ports and freighting companies across the globe to reevaluate their Iranian business. Dozens of Iranian vessels that transport crude oil, industrial equipment and other goods and supplies in and out of the Islamic Republic have been denied insurance coverage for weeks. Most ports will refuse entry to vessels if they are not covered for possible damages. Maritime insurer Lloyd's announced this month that it would stop underwriting gasoline imports to Iran. But Russia and India have stated that they intend to continue legitimate trade with Iran. Iran plans to provide government sanctioned insurance to ship owners in order to resolve the crisis. In an effort to compel Iran to halt its uranium enrichment, the U.N. Security Council last month imposed a wide range of military and financial sanctions on Iran, including a call for nations to prevent their financial institutions from insuring or reinsuring ships suspected of carrying banned weapons components. Members were also asked to report to the U.N. on Iran's efforts to set up front companies to conceal its shipping activities. Congress this month adopted far more stringent measures designed to target foreign companies that sell gasoline and other refined petroleum products to Iran. Although Iran is the second-largest oil producer in the world, it lacks refining capacity and relies on foreign suppliers for nearly 5 million gallons of gasoline a day. Iran claims its uranium enrichment program is needed to develop energy, but the United States and others believe Iran is seeking to build nuclear weapons. In a retaliatory move, Iran's parliament on Tuesday passed a bill calling for cargo inspections of any ship from a country that inspects Iranian vessels under the sanctions. Foreign-flagged ships could encounter problems sailing to Iranian ports. Maritime transportation companies often charter ships and rent out portions of the cargo space. Freighting companies regularly outsource loading to subcontractors. All of these groups will be responsible for the cargo the ship is carrying and they must prove to the U.S. government that they thoroughly checked the cargo for forbidden products. These new requirements mean more paperwork and time spent moving a vessel to port. Iranian private transporters are worried for the future. The European Union is expected to approve its own sanctions against Iran in the coming days. Source: The Washington Post