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i-maritime News Service

Insurers offer less than $10-m cover for ships carrying Iran crude - 2012-04-09

Public sector insurers have told shipping companies that they may not be able to provide a cover of even $50 million for a ship carrying Iranian crude.

At a meeting on Tuesday, the insurers are understood to have indicated that the maximum risk they can together underwrite without reinsurance is Rs 42.5 crore for a ship, which is less than $10 million. (A fifth of what the shipping lines have sought.) However, an insurance company official said, “this is not the end of the road; the matter is still very much under discussion.”

Indian shipping lines had sought a limited insurance cover of $50 million from the government-owned insurance companies after the Protection and Indemnity (P&I) clubs decided to withdraw their insurance cover for ships carrying Iranian cargo following the European Union ban on Iran. P&I clubs offer third-party cover of up to $1 billion. Insurers may rework their offer in consultation with the General Insurance Corporation, which is trying to work out a solution to the problem that could impact India's oil imports from Iran, said a shipping company official. “If we want to buy Iranian crude, we will have to find a way out .The Government is aware of the matter. We are optimistic that our insurance companies will work out a solution,” a top official of another shipping company said.

Earlier, Indian ship-owners had asked for a sovereign guarantee for transport of Iranian cargo, which the Government had turned down. The Europe-based P&I clubs which offer third party liability cover to 90 per cent of the world fleet, including Indian flag carriers, will not offer cover to ships carrying Iranian cargo from July 1, 2012.