Western powers want the U.N. Security Council to approve a resolution imposing new sanctions on Iran which they suspect of developing nuclear arms under the cover of a civilian nuclear energy program. Tehran says its energy plan is peaceful.
The London marine insurance market plays an influential role in the global marine insurance industry. Through its Joint War Committee, it added Iran to a list of areas it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils on March 11.
Neil Roberts, secretary of the LMA, which represents the interests of all underwriting businesses in the Lloyd's market, said ships transiting the area will have to notify underwriters of voyages up to 12 nautical miles off Iran's coast.
"The reason it's been added is that underwriters are mindful of possible U.S. sanctions against the country and really need to have a good idea of their exposures and the trade they are covering," Roberts told Reuters Monday.
"Underwriters will have to be commercial in the way they approach this situation."
U.S. President Barack Obama has not ruled out any options in dealing with Iran, the world's fifth-largest crude oil exporter, but U.S. officials have made clear that their preferred option is diplomacy, given the difficulty of enforcing sanctions and the risk that military action could cause wider conflict.
Nevertheless both the U.S. House and Senate have approved versions of legislation to let President Barack Obama impose sanctions on Iran's gasoline suppliers.
J. Peter Pham, a strategic adviser to U.S. and European governments, said global companies which have big business interests in the United States will need to assess whether trade with Iran was worth it given potential penalties on companies.
"They will have to look at where their profit centres are and perhaps make a decision that they would give up business in Iran in order to protect more valuable business elsewhere. That includes the energy sector as well as the shipping industry," he said.
A marine insurance industry source said the costs in relation to Iran would be looked at on a "case by case basis."
"It's highly unlikely there will be some wholesale repricing of risk," the source said.
The LMA's Roberts said marine insurers were being "proactive" by placing Iran as a high risk area.
"The threat to them is that the U.S. agency OFAC would stop any dollar transactions for any business that is in breach of the sanctions," he said, referring to the U.S. Treasury's Office of Foreign Assets Control.
"The legislation is still not fully framed and we are not really sure what we will be dealing with."
(Editing by Myra MacDonald)
