An interesting article has today been published by Forbes which investigates the possibility that Iran has set up a false insurance company, offering illegal insurance policies, in order to circumvent the EU sanctions and enable the Persian State to continue exporting its crude.
Very Large Crude Carriers are obliged by international maritime authorities to carry mandatory third-party liability insurance of a value up to $1 billion, known as Protection and Indemnity Coverage. This type of coverage is only offered by large insurance groups (P&I clubs), 90% of which are based in Europe. EU sanctions against Iran have prevented European insurers from dealing with Iranian tankers, and this has severely affected Iran’s export, as without cover, its tanker cannot deliver oil. It has lost all of its European customers, and other international customers have drastically reduced their purchases.
Suddenly, out of nowhere, an Iranian P&I club has emerged and started to offer full cover and protection to the entire National Iran Tanker Company’s (NITC) fleet of 44 ships.
The insurance group, Kish P&I, was established in 2011, and does not seem to have the financial means to provide the cover that it offers. According to the website, Kish P&I offers $500,000 coverage for accidents and says that the remaining $999.5 million would be provided by a consortium of Iranian Insurers.
That is where things start to seem a bit dodgy, and it only gets worse.
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According to Central Insurance of Iran, Kish P&I only holds 44 policies, exactly the number of tankers that NITC owns, and there is no information that suggests any other ship owners may be covered by one of these policies.
NITC claims to be a privately entity, but its shareholders are clearly state owned pension funds, which led the US to label the company as a government-owned entity. This leads to the possibility that the same pension funds that underwrite Kish’s policies, and will provide the missing $999.5 million, could well be the same funds who own NITC.
Kish could well be a mask of a company to prevent people from noticing that the owners of the tankers are, in fact, the insurers as well; which kind of defeats the object of insurance in the first place.
By. James Burgess of Oilprice.com