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Indian senior official: global re-insurers not to provide cover for Iranian oil yet

MUMBAI, JANUARY 22, 2014 
The special insurance pool arrangement by the Government meant to provide cover for domestic refineries processing crude oil imported from Iran is likely to be a non-starter. This follows the six-month waiver on sanctions imposed on Iran for its nuclear activities, following which global reinsurers could begin providing cover to Iran’s oil trade.
The Government had envisaged setting up a Rs 2,000-crore energy insurance pool, with General Insurance Corporation as its manager, and contributions from state-owned insurance companies and oil refineries.
Speaking to Business Line, Financial Services Secretary Rajiv Takru said, “While the Finance Ministry is ready to set up the pool, the clients (oil companies) are yet to come forward.” He said most oil refineries are waiting for the West to lift the sanctions.
At present, Indian general insurers provide cover to oil refiners and then re-insure the risk with global re-insurers. But with Iran under US/EU sanctions, global re-insurers provide cover with a “sanction clause” that limits the payout in case of a claim.
“Currently, most of our reinsurance treaties are with European re-insurers. While they have been saying that sanctions on Iran will be removed, we are waiting for an official declaration from them,” said a senior official from a public sector general insurance company.

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