Reuters: London’s marine insurance market has created a clause ensuring underwriters do not breach sanctions due in part to western measures against Iran, a senior Lloyd’s Market Association (LMA) official said on Monday.
By Jonathan Saul
LONDON (Reuters) – London’s marine insurance market has created a clause ensuring underwriters do not breach sanctions due in part to western measures against Iran, a senior Lloyd’s Market Association (LMA) official said on Monday.
Marine underwriters in London have been looking at ways to deal with the growing raft of Iran-related measures as well a U.S. executive order on a Somali group.
“Underwriters have taken steps to ensure they do not contravene the sanctions. One of the ways of doing that is to write carefully the allowed business using an appropriate exclusion or limitation clause,” Neil Roberts, a senior technical executive with the LMA, told Reuters.
“They have put together a clause with U.S. legal thinking which is now available for use.”
President Barack Obama in April issued an executive order blocking the U.S. assets of an Islamic Somali insurgent group that professes loyalty to al Qaeda, and 11 individuals he linked to conflict and piracy in the anarchic country.
“The clause is designed to address most things, not just Iran and Somalia although they have been extensively discussed,” Roberts said.
“This is designed to try and address any sanction prohibition or restrictions which will come out under U.N. resolutions or trade and economic sanctions from the EU, UK or the U.S.”
The London marine insurance market plays an influential role in the global marine insurance industry. The LMA represents the interests of all underwriting businesses in the Lloyd’s market.
“They are mindful of the proliferation of sanctions together with their extra territorial effect,” Roberts said.
In a blow to Iran, which depends on its seaborne trade, insurance market Lloyd’s of London said in July it would not insure or reinsure Iranian petroleum shipments.
“The market has been working on the commercial aspect of how that should be implemented,” Roberts said in an interview.
“This is a practical answer from the market and sits alongside the Lloyd’s instruction to managing agencies which directed them to be aware of the situation and take steps to comply.”
The West suspects Iran’s nuclear work is aimed at bomb-making but Tehran says it is for peaceful purposes. Wide ranging U.S. and European Union sanctions last month have aimed to squeeze Iran’s refined petroleum imports and increase its international isolation.
Roberts said the consequences for underwriters would vary but added that due diligence needed to be demonstrated.
“It is helpful to have evidence that you have included a clause that says there are instances where we cannot provide cover, and there are instances where we cannot pay claims because of circumstances beyond our control,” he said.
Roberts said hull underwriters had led on the initiative to create a clause.
“Whilst it was designed by those on the shipping side, it could be applied by anybody should they choose whether marine or non marine,” he said.