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International Group of P&I Clubs

International Group of P&I Clubs

Industry: 
Financial Services, Shipping
Country: 
UK
Contact Information: 
Sources: 

“The world's largest pool of tanker insurers is advising members they shouldn't insure Iranian oil shipments, citing the short-time frame of sanction loosening agreed to between Iran and Western powers…In recent weeks, shippers and their insurers have studied the legal and practical aspects of the relief. In an interview with The Wall Street Journal Friday, Andrew Bardot, executive officer of the International Group of Protection & Indemnity Clubs, a pool of member insurers who cover around 95% of oil tanker capacity world-wide, said its members are warning clients the short-term nature of the relief make it impossible for them to indemnify Iranian cargoes. P&I members ‘are saying: 'Don't do it' as we cannot guarantee coverage,’ Mr. Bardot said. With many liability claims stemming from seaborne accidents taking years to be resolved, ‘it is highly unlikely that claims would be presented and liabilities finally determined prior to the July 20 cutoff’ of the temporary sanctions relief, Mr. Bardot said. In addition, U.S. reinsurers participating in the group's pool remain subject to insurance prohibitions, he said. That could effectively make it impossible for any member of the group to make payouts on claims. The insurance official said the International P&I was seeking clarifications from the U.S. Treasury and the European Union on whether such hurdles could be surmounted. A U.S. Treasury spokesperson said it is ‘still actively looking into this issue.’ A spokesman for EU foreign policy chief Catherine Ashton said 'consultations are ongoing,' without providing more details. For now, however, operators aren't taking chances. ‘We have sought legal advice and been told it is impossible to return’ to carrying Iranian oil, an official at a large Greek tanker operator said.” (Wall Street Journal, “Tanker Insurers Warn on Iran Shipments -- Update,” 2/14/14)

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“A group of insurers warned shipowners this week to be careful when signing deals to carry Iranian oil because the United States has not been able to clarify whether insurance claims will be paid after the suspension of sanctions ends in July…The easing of the insurance sanctions for ships has been expected by analysts to increase Iran's crude oil exports, although data from Tehran's largest customers - China, India, Japan and South Korea - has so far shown steady to lower shipments since the deal was signed in November. Uncertainty over post-July insurance payments, however, has made the suspension of sanctions on ship cover ‘of very limited, if any, value to shipowners,’ the group of shipping insurers said in a note this week. The International Group of P&I Clubs said it was uncertain if insurance claims that arose while sanctions are eased would be honoured if they remained unpaid after July 20. The International Group has been in talks with the U.S. Office of Foreign Assets Control but OFAC has not been able to confirm whether payments for claims could be made after July 20 when sanctions could possibly be reimposed, the group said. ‘Members should proceed on the basis that beyond 20 July 2014 (or any extension of the initial six-month period), clubs will not be able to respond to any claims presented in respect of liabilities arising during the 20 January-20 July suspension period,’ the group said in its note…Shipowners ‘are strongly recommended not to enter into contracts for transportation of crude oil, petroleum oil and petrochemical products’ without consulting their individual P&I insurers, the International Group said.” (Reuters, “Insurers group sounds alarm over Iran ship insurance,” 1/30/14)

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“For six months from Monday, the European Union and the United States have eased some sanctions including restrictions on ship insurance, which became available for the first time since mid-2012. Vessels transporting Iranian crude have previously been left with limited alternatives, mostly set up by importers. ’Normal services have been partially resumed in relation to those activities, which are now permissible for a temporary six-month period subject to further review and possible extension thereafter,’ said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world's tanker fleet. ‘As from July 21, there will no longer be this flexibility, obviously pending any further extension or renewal’…The International Energy Agency said in its monthly report on Tuesday that Iranian exports rose in December by 50,000 bpd to 1.15 million bpd, and could increase further now shipments are easier to insure. ’The relaxation in tanker insurance provisions in the current sanctions regime may lead to small increases in Iranian crude exports to existing customers in the short term,' said the IEA, which advises industrialised countries on oil policy.” (Reuters, “Iran's oil sales rise as sanctions pressure eases - sources,” 1/22/14)

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“Japan's main private ship insurer, the Japan P&I Club, said it has resumed normal coverage for tankers carrying Iranian oil, a step in easing imports in line with U.S. and EU moves as relations with Tehran thaw…The international P&I club, of which JPI is a member, resumed normal coverage of $7.6 billion per ship, including $1 billion for oil spills, on Monday as European Union reinsurance became available again for the first time since mid-2012, a JPI official said…’The resumption of cover is very much restricted to that which is expressly permitted under the implementing EU and U.S. measures,’ Andrew Bardot, executive officer of the International Group of P&I clubs, said separately. 'It does not fully open up the trade or the insurance of the trade. It is restricted to current importers based on their import quotas and it is for six months only’…Japan's sovereign scheme will stay in place for the time being, but will no longer be liable for insurance payments now that buyers can obtain JPI coverage, a government official said. The government is not ready to scrap the sovereign scheme just yet, as the sanctions relief is regarded as temporary, the official said. Japan's parliament would have to authorise any extension of the scheme past the fiscal year ending March 31.” (Reuters, “Japan resumes private insurance for Iran oil imports,” 1/21/14)

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"Europe is days from suspending a ban on reinsuring tankers hauling Iranian oil, a measure that helped cut the nation’s crude exports by more than 50 percent when it was implemented. The six-month relaxation starts Jan. 20 and will allow companies following European Union law to reinsure tankers shipping Iran’s oil to India, China, Japan, South Korea, Turkey and Taiwan, an EU official told reporters in Brussels today, speaking on condition of anonymity because he wasn’t authorized to be quoted by name. The step affects most of the world fleet because 90 percent of all merchant vessels are covered by members of the London-based International Group of P&I Clubs…Entities designated for sanctions are still barred from buying coverage, Andrew Bardot, the London-based executive officer of the International Group of P&I Clubs, said by e-mail today. The U.S. Treasury’s Office of Foreign Assets Control is 'on the same track' as the European Commission, Bardot said, citing talks with both organizations. The International Group is a claims-sharing pool for insurance mutuals around the world. Its members must follow EU law to be part of the group and they cover most of the world’s merchant ships for risks including oil spills. The commission is the European Union’s executive arm…The EU will relax the ban on Jan. 20, once the International Atomic Energy Agency has certified the conditions in the November agreement have been met, the official said.” (Bloomberg, “Europe Days From Lifting Reinsurance Ban on Iran Oil Exports,” 1/16/14)

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"Most loans to buy vessels require insurance against risks including spills and collisions, and banks will normally only accept cover provided by members of the International Group of P&I Clubs, according to Harry Theochari, a London-based shipping and asset-finance lawyer at Norton Rose LLP. The group’s members insure about 95 percent of the tanker fleet and follow European law, which will prohibit all such cargoes from July 1 as part of international efforts to curb Iran's nuclear program... 'The banking is a separate issue that we don’t think was at all foreseen and is potentially more far-reaching,' said Andrew Bardot, London-based secretary and executive officer of the International Group of P&I Clubs." (Bloomberg, "Bank Foreclosures Loom for Tanker Owners Hauling Iranian Crude," 5/30/2012)

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"Asian shippers are seeking new sources of insurance for Iranian cargoes because the European Union’s embargo extends to 95 percent of the world’s tankers that are covered by the 13 members of the London-based International Group of P&I Clubs." (Bloomberg, "Iran Ship Insurer Says Asian Operators Asking to Cover Tankers," 5/14/2012)