With the European Union ban on insurance cover for tankers carrying Iranian crude set to come into effect on July 1, at least one Indian shipowner has approached the Iran-based Kish Protection & Indemnity Club for liability coverage, an official of the Iranian insurer told Platts.
"An Indian shipowner has gotten in touch with us. They were enquiring about whether we can provide insurance cover. But we need permission from our supervising unit, which is the Central Insurance of Iran," Kish P&I Club's managing director, Captain Mohammadi Banaei, said over the telephone from Tehran last week.
He declined to reveal the name of the shipowner, saying he has yet to receive the go-ahead from the Indian company to disclose its name.
An Indian tanker broker following the matter confirmed this development Monday.
Currently all the 39 tankers belonging to the National Iranian Tanker Company is covered by Kish P&I Club. In February last year, NITC lost its P&I cover provided by four European clubs - the UK Club, North of England, West of England and Steamship Mutual - which are part of the International Group.
P&I Clubs provide insurance cover for a broad range of risks such as third-party liabilities, which include a carrier's liability to the owner of a cargo for damage to the cargo, the liability of a ship after a collision, environmental pollution and war risk insurance.
The US and the EU have imposed sanctions against Iran for pursuing its nuclear program, which the Islamic Republic says is for peaceful purposes. The EU has imposed an embargo on the import of Iranian oil from July 1 while US sanctions threaten to bar any entity dealing with Iran's central bank from its financial system.
According to Kish P&I Club's website, it offers between $500,000 and $1 billion of cover, with reinsurance covered by a consortium of Iranian insurers headed by state-owned Central Insurance of Iran, which was established in 1971 in parliament.
Referring to the Indian shipowner's request for cover, Captain Banaei said: "Before we consider the request, we have to investigate as to how we go about it. We to assess their vessels."
He said that the club's priority currently was covering NITC's fleet. The latter is planning to add 12 ships between now and next year, he added.
"Our main responsibility at the moment is to offer protection to the NITC ships," he said.
The Indian companies that own tankers are the Shipping Corporation of India, Great Eastern, India Steam Ships and Mercator Lines.
SCI's Bulk Carrier and Tanker division director, Captain Sunil Thapar, told Platts Friday he has not heard about any Indian tanker company asking for cover from Kish P&I.
"At this moment, the question is whether Indian terminals will accept ships with Kish P&I cover," Captain Thapar said, adding that the financial sanctions imposed on Iran would make it difficult for any dollar-based payout in the event of claims.
The other three Indian tanker companies could not be reached for comment.
INDIAN OFFER OF $50 MIL COVER FOR IRAN-LOADING VESSELS NOT FINAL YET
Meanwhile, the recent proposal by state-owned General Insurance Corporation of India to offer $50 million of coverage to Indian shipowners for their tankers loading out of Iran is a not a done deal yet, according to Captain Thapar.
"The decision by the Indian insurance companies is not yet sanctioned. It is still being worked out. In shipping, unless it is done, only then you can say it is done for sure. The situation is still very fluid," Captain Thapar told Platts from Mumbai.
The proposal last week by the General Insurance Corporation of India and its subsidiaries - National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited - has to be approved by India's Insurance Regulatory and Development Authority. IRDA's head office in Hyderabad has yet to reply to Platts queries on the issue.
When asked if $50 million was enough to cover the risk involved in transporting crude from Iran to India, Captain Thapar said that was the amount that the Indian National Shipowners' Association had asked for.
"I can't say whether this is less or more," Captain Thapar said.
On the question of whether the Indian government would provide a sovereign guarantee to domestic tanker owners for lifting crude from Iran, Captain Thapar that was for the government to decide.
"On crude transportation, when push comes to shove, anything can happen," he said.
India is considering sovereign guarantee protection to domestic shipowners for importing crude oil from Iran as Indian shipowners face losing P&I cover when EU sanctions come into effect in July, then-shipping secretary K Mohandas was reported as saying in February this year.
Meanwhile, Kish P&I's Captain Banaei said that $50 million was too little to cover the risk involved in transporting crude from Iran to India.
"They [Indians] think it is sufficient. [In fact], it is a very high risk [to carry oil]. In case there is an accident, the whole company will be risking its survival," Captain Banaei said.
The International Group, an association of 13 member clubs that provide liability cover for close to 90% of the world's shipping tonnage, has a mechanism for sharing all claims in excess of $1 billion, according to its website. Except for the Japan P&I Club, all other IG members are based in the West.
"I hope we can create an IG among Asian countries called the Asian Group of P&I Clubs, which can cover ships owned by Asian owners," said Captain Banaei, adding that the Asian countries have the financial might to work out reinsurance cover arrangements among themselves.
Source: Platts