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Marine insurance: the stranglehold on Iran?

European Union oil embargo on Iran will take effect in July Marine insurance, or lack of it, may yet turn out to be the most effective sanction used by Western nations in 17 years of tightening the screws on Iran's nuclear program.A European Union oil embargo on Iran, set to take effect in July, prohibits EU insurers from covering Iranian oil exports anywhere in the world. With around 90 percent of the world's tanker insurance based in the West, the arcane world of reinsurance and liability coverage has become a powerful weapon.Iran, OPEC's second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, and the four main buyers - China, India, Japan and South Korea - have yet to find a way to replace the predominantly Western cover for the giant crude oil cargoes en route from Iran to refineries across Asia. And that could dent Iranian crude exports to key markets, particularly Japan, cutting off a valuable source of Tehran's foreign exchange income. Crude oil prices have risen close to 40 percent to above $100 per barrel since October, partly on fears over supply disruptions from Iran."The bottleneck is insurance. If that's not settled, ...

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Japan ship insurer sets new rules on Iran oil voyages

Ship owners must alert insurer of Iran oil voyages Ship owners covered by Japan P&I club must alert the maritime insurer in advance of any plans to transport Iranian oil and petrochemicals that could fall foul of Western sanctions, the insurer said.The United States and European Union have tightened measures aimed at reducing Iran's oil trade, stemming the flow of petrodollars to Tehran to force the OPEC member to halt a nuclear programme the West suspects is intended to produce weapons.European insurers and reinsurers will be prohibited from indemnifying ships carrying Iranian petrochemicals anywhere in the world from May, and crude and oil products from July.Although Japan's P&I Club, which provides insurance for shipping companies, does not directly fall under the sanctions regime, it is largely dependent on the European reinsurance market to hedge its risk."Any reinsurers including other (P&I clubs) subject to EU legislation will not be able to pay out if a claim involves a sanctioned cargo," said Japan's main ship insurer in a circular to its members on Tuesday."This will impact the member's ability to make a recovery from the club as the club is not able to pay out on any claim in relation to which ...

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INSA asks EU to continue insurance cover to Indian ships

INSA requests incurance cover Shipowners body INSA said it has requested the European Union (EU) to continue providing insurance cover to Indian ships for carrying oil from Iran, which is facing sanctions from the US and Europe."We have written to the European Union to allow its protection and indemnity cover (P&I) club to continue extending cover to Indian vessels," the Indian National Shipowners Association (INSA) CEO Anil Devli told PTI.INSA has mentioned that not providing insurance cover would be against the International Convention on Civil Liability for Oil Pollution Damage, Devli said.The sanctions prohibit EU-based entities from providing insurance and guarantees for transportation of oil from Iran. Most of the Indian shipping lines take protection and indemnity cover (P&I) mainly from them.Shipowners have expressed apprehensions that they may not get international insurance cover following the sanctions, announced on January 23.Earlier, the government said that India is considering providing sovereignguarantee to domestic shipping lines for import of crude oil from Iran. SCI, which operates about 40 tankers, will be one of the most affected companies as it will lose its EU insurance coverage for oil fleet operating in Iran from July 1, as European insurers will be prohibited from indemnifying ships ...

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High Court relief for MV Rak insurer

Responsibility of the owner or the insurer towards the payment of damage Granting relief to the Romanian insurer of the MV Rak carrier - a vessel that sank off Mumbai's coast in August last year - the Bombay High Court directed the Director General (DG) (Shipping) to give the insurance firm a hearing before black-listing it and preventing other vessels, insured by the firm, from entering Indian ports.Widening the issue, Justice P B Majmudar and Justice R D Dhanuka also asked the Qatar-based company Delta - that owned the MV Rak - and its Dubai-based charterer and agent to be joined as parties in the litigation.The court said the issue of the responsibility of the owner or the insurer towards the payment of damages for environment pollution, caused by the sunken ship, needs to be ascertained."Somewhere it should be sorted out," the court said pointing out that pollution caused by the leakage of oil from a sinking vessel poses serious environmental hazard. The court said it needs to be determined whether or not an insurer can be held accountable for the damages if the owner of the vessel fails to respond.In the interim period, however, there would be no restriction ...

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ITIC: Professional Indemnity Cover Needed

Professional indemnity cover essential in litigious shipping industry International Transport Intermediaries Club (ITIC) has warned that, in today's increasingly litigious business environment, there is a growing need for shipping professionals to have third-party indemnity insurance cover. This can be the case even in those sectors where insurance has not previously been deemed necessary, and in cases where, despite a favourable outcome to legal proceedings, substantial costs may be unrecoverable.Writing in its newsletter, The Wire, the latest issue of which is dedicated to the hydrographic sector, ITIC cites by way of example a US court ruling which held that the then-US Hydrographic Office (USHO) was not negligent in causing a passenger ship to ground between Nantucket and Martha's Vineyard after the ship's owner claimed that a reef had been charted negligently.Firstly, the court held that the error on the chart was not a result of any negligence by the USHO because the organisation conducted the survey in 1939 using state-of-the-art techniques. It also found that there was no pressing need for the USHO's successor, the National Oceanic and Atmospheric Association (NOAA), to perform a new survey. Finally, the court ruled that the ship did not actually rely on the defective chart ...

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Validus faces up to $65m loss on cruise ship disaster

Validus Holdings' likely claims payout on the Costa Concordia disaster will not increase Validus Holdings' likely claims payout on the Costa Concordia disaster will not increase even if insured losses are much higher than currently forecast.The Bermuda reinsurer's chairman and CEO Ed Noonan told The Royal Gazette that the company's estimated loss of up to $65 million resulting from the cruise ship disaster was not a surprise, given the company's significant presence in the marine market.His comments came after Validus's announcement of a narrow full-year profit in a challenging 2011.Validus announced last week that it could be on the hook for between $50 million and $65 million based on total estimated insured losses from the cruise ship tragedy of $845 million to $950 million, representing a share of between six and seven percent of the industry-wide loss."It's right in line with our market share," Mr Noonan said. "We a big marine insurer in Bermuda and in London."The interesting thing about this is that no one really knows yet what the industry losses will be. But even if it goes to $1.5 billion our loss does not change, because of the protection we have bought."The Costa Concordia ran aground and came ...

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Rena Cargo Owners Begin Filing Claims

Owners to declare whether the Rena is considered to be still in route Cargo owners have begun lodging claims against Mediterranean Shipping Co., the charterer of the grounded Rena in New Zealand.MSC is waiting for the ship's owner, Costamare, to formally declare whether the Rena is considered to be still in route.If the ship is declared to be not on a "continuing voyage," salvors will have some rights to the cargo, MSC's general manager, Phil Abraham told the New Zealand Herald.Uncertainty over whether the containers will be recovered has meant customers, many with household possessions on board, cannot make claims to their insurers. Abraham said some large shipping companies with cargo on board had already lodged claims with his firm."We are dealing with those but we are having to wait to see what the owners and salvors are going to do," he said.Costamare, which has insured its cargo with the Swedish P&I Club, has 60 days from the day of the Rena's grounding on Oct. 5 to file an action in a court in New Zealand or another jurisdiction to limit its liability in the accident. Source: Journal of Commerce

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Ship Insurers Offers Discount for Armed Guards on Ship

Discounts of up to 35% A number of kidnap and ransom insurers are demanding the presence of armed guards on vessels transiting the Gulf of Aden and the Indian Ocean before they will provide cover, and others are offering discounts of up to 35% to shipowners employing private security firms for voyages in high-risk areas.For an average vessel valued at $20m, the starting price for a policy is in the region of $35,000 for a seven-day transit of the Gulf of Aden. With armed guards on board and a K&R policy in place, a discount of 35% would represent a saving of $12,250.While no insurer was prepared to confirm they were offering such discounts or requiring the use of armed guards when underwriting policies, some told Lloyd's List they offered some form of discount on the war rate for vessels transiting pirate hotspots.Reductions in premiums are made for the use of private security, as well as for vessels that have a K&R policy and those that have implemented Best Management Practice 3 or 4.When asked if he was aware of underwriters offering discounts for armed guards, Lloyd's Market Association senior executive Neil Roberts said: "I'm sure it's true, but this ...

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Kidnap & ransom insurance new buzzword among companies

There is an increase in the number of kidnappings and ransom in recent years With pirates striking with alarming regularity and Naxal menace on the rise, the demand for kidnap-&-ransom (K&R) insurance policies from the corporates is on the rise.K&R insurance provides coverage for abduction and other events through a combination of financial compensation, including paying the ransom and extortion money, and expert crisis management service. "We have seen corporates with operations in Maoist-infested areas buying these policies," said G Srinivasan, chairman and managing director, United India Assurance. Hit by piracies on the high seas, shipping companies, too, are now buying K&R policies, said a senior official of ICICI Lombard General Insurance."We have seen demand for K&R policies from shipping companies picking up," he said. Normally, international shipping companies take these covers, but, of late, Indian companies, too, are buying them, said Srinivasan.There has been a discernible increase in the average ransom payment in the recent years.The number of kidnappings has also risen. Insurers say that while, earlier, hardly 100 such policies were sold in a year, now the number has crossed 300. Companies which offer such policies are New India Assurance, United India Assurance, Tata Aig General Insurance and ...

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Libya is considered as a high risk area for merchant vessels

By London's marine insurance market There is no immediate prospect of Libya being removed from a list of areas deemed high risk by London's marine insurance market and underwriters will seek a stable period before looking at de-listing, a market official said on Monday.Libyan government tanks and snipers put up scattered resistance in Tripoli on Monday after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Muammar Gaddafi's 42 years in power.The Joint War Committee (JWC), which groups syndicate members from the Lloyd's Market Association (LMA) and representatives from London's insurance company market, added Libya to a list of area it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils."There is no immediate prospect that Libya would be taken off the listed areas if hostilities were declared over," said LMA senior technical executive Neil Roberts."Every situation is different, but underwriters would certainly be looking for a stable period in the country before considering whether to de-list," he told Reuters.The London marine insurance market plays an influential role in the global marine insurance industry."It would be unrealistic to take it off in the short term and the situation ...

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