The public sector general insurance companies have been asked to consider insuring ships carrying Iranian crude.

A senior official with one of the insurance companies said: “We are examining the possibility.” The four government-owned insurance companies had preliminary discussions with Indian shipping companies last week, an official said. The shipping companies' request has Government blessings, he said.

Shipowners fear that they cannot sign new contracts with Indian oil companies for import of crude oil from Iran unless they are sure about the insurance cover.

The Europe-based protection and indemnity (P&I) clubs have decided not to extend cover to ships carrying Iranian cargo after the EU sanctions on Iran. The P&I clubs provide insurance cover for third-party liabilities.

New Delhi is apparently not in favour of providing a sovereign guarantee to vessels carrying Iranian crude as indicated earlier. But the Government has asked the insurance companies to study whether they could underwrite shipowners' risk. The trouble is that Indian insurers may have to take the entire risk on their books as they may not get re-insurance from Europe.

Limited cover

An official with the General Insurance Corporation ruled out the possibility of getting reinsurance for Indian ships if the EU sanctions come into force from July 1. However, Mr S. Hajara, Chairman and Managing Director, Shipping Corporation of India, said shipowners have asked only for a limited cover which Indian insurers can offer even without an overseas reinsurance.

Awaiting response

Local insurers could get non-European reinsurance, an official at a private shipping company said. “We are waiting for a response from Indian insurance companies, without insurance we will not able to carry cargo, said an official with Indian National Shipowners' Association. According to reports, Indian oil importers are also asking if Iranian oil suppliers are willing to sell crude on c.i.f basis. In that case, it will be the responsibility of the seller to arrange shipment of the cargo and its insurance.

(This article was published on March 21, 2012)
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