Wednesday 06 Oct 2021 | 15:19 | SYDNEY
Wednesday 06 Oct 2021 | 15:19 | SYDNEY

Where there a will, there insurance


Rodger Shanahan


2 May 2012 15:13

One of the EU's successes in its tougher sanctions on Iran has been the extension of the ban to shipping insurance, more than 90% of which is controlled through Europe. Without being able to insure ships carrying Iranian oil, shipping owners are naturally reluctant to take the risk of an accident that could bankrupt their company.

But two of Iran's major oil customers, India and China, have recently proven that even the most clever sanctions regimes are rarely if ever watertight. India announced this week that its state-run insurers will provide partial cover to Indian-flagged carriers carrying Iranian oil. China is also considering sovereign guarantees for its tanker fleet, as is Japan. South Korea's attitude is unknown at this stage.

There is no doubt that Iran is under an increasingly stringent sanctions regime, and its willingness to come to the negotiating table, first in Turkey and later this month in Baghdad, is testimony to that. 

But not for nothing are Iranians are known as tough negotiators, and their willingness to cede ground at these talks is entirely dependent on the price they can extract from the West. Which is why the Asian moves towards sovereign insurance cover is bad news for negotiators. The more the Iranians can prise open the sanctions regime before they sit down at the table, the higher the price they will feel confident in asking. 

Who would have thought the insurance industry could be so interesting?

Photo by Flickr user Jaimito Cartero.