Web Alert: Iran sanctions - update on the International Group's efforts to arrange a 'fall-back' reinsurance
11 March 2016
The continuing application of US primary sanctions to US domiciled reinsurers participating in the International Group's reinsurance arrangements means that members remain exposed under the club’s sanctionsclub sanctions’ rules to the risk of a partial reinsurance shortfall in respect of non-certified liabilities towards, or incurred by, Iranian interests.
The International Group (IG) is working on a ‘fall-back’ reinsurance protection to cover this default risk, for which it has now obtained the approval of the US authorities, and the IG's brokers are currently in the process of placing corresponding reinsurance cover outside the US markets. Due to compliance implications, it is taking some time to put this cover in place, but it is hoped that this will be completed shortly. Once this cover is in place, clubs will then be able to confirm cover for non-certified as well as certified liabilities towards, or incurred by, Iranian interests (other than SDNs or liabilities arising out of prohibited trades).
The cover is, however, subject to a much lower limit, with one paid reinstatement only and more restricted terms than the main IG GXL placement. For these reasons, it is not considered to be amount to an adequate long-term solution to the problems presented to the IG’s reinsurance arrangements by continuing US Primary sanctions and the IG will continue to engage with the US authorities for the purpose of securing a comprehensive insurance solution to meet all shipowners’ needs.