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77 Iranian Ocean Freight Carriers Receive P&I Coverage as Iran Wins Club Membership
6 Sepr 2017
Tehran has been keen to bring Iran’s ocean freight shipping fleet into line with international standards and for IRISL to compete in the increasingly open trade market, thereby boosting Iran’s international trade. The International Maritime Organization has 140 member states with Iran ranking among the top 20. As of July, the Financial Tribune has reported that 77 Iranian ships now are protected with indemnity insurance cover from the Steamship Mutual Underwriting Association Limited. This was not possible during the era of sanctions against Iran. Now, however, Iran is a member of three P&I clubs, according to the director of IRISL’s Insurance Brokerage, Mohammad Reza Banaei. Quoted on IRISL's website, Banaei said that until 2016’s lifting of sanctions:
"… covering all potential risks had to be covered by domestic entities and if an incident happened, the government-backed reinsurance fund and local insurers had to bear the costs ..."
Since the nuclear accord implementation in January 2016, he said, it was decided that coverage of sea freight shipments crises, such as oil spills, would be levelled with foreign insurers, in coordination with the Central Insurance of Iran. This has led to IRISL receiving coverage from a number of international P&I clubs, according to Banaei, including becoming:
"… a member of [Oslo-based Assuranceforeningen] Skuld, West of England, and Steamship Mutual."
A Norwegian trade mission to Tehran in August 2016 led to the signing of a memorandum of understanding with Skuld and IRISL, which is now seeing sea freight to and from Iran’s ports come under wind.
The West of England is a world leading mutual maritime insurance provider; this reputable partner provides worldwide ship owners, charterers and operators with liability insurance for e.g. losses, damage or accidents and related services. This gives a greater measure of protection to import and export companies employing services of member ocean freight companies.
The London based Steamship Mutual Underwriting Association Limited have gained over 100 years’ expertise. Incorporated in 1909 this industry leader offers mutual protection and underwriting services, as well as providing marine liability insurance.
The 77 insured ocean freight carriers belong to IRISL and its subsidiary, Valfajr Shipping Company. IRISL specialized in passenger and ocean cargo carriage in the Persian Gulf and Oman Sea following the 1979 Islamic Revolution in Iran. Ten years later, Valfajr was established as an independent corporate entity.
IRISL representation in the international P&I clubs required the consent of membership of Steamship Mutual’s board of directors. Banaei said that in addition to being a member of the club as an insurer, Iran now also has a seat on the club's board. It is hoped that Mohammad Saeidi, CEO and chairman of IRISL board’s membership, will "improve the level of cooperation and interaction with Steamship".
The Importance of International P&I Clubs
Currently 13 International P&I clubs cover approximately 90 percent of all container ships delivering cargo transport in international waters. The biggest shipping companies usually often have P&I club board members who are responsible for policy decisions.
Banaei emphasised the importance of Iran's membership of these international P&I clubs as they make up the "biggest reinsurance partnership in the world". As such, they cover billions of dollars in worldwide sea freight insurance claims. He went on that IRISL shipments were covered for: "… up to $1 billion for oil spills, but owing to the structure and synergy of the clubs, they can cover damages higher than that ".
Increasingly, the Iranian shipping industry is re-establishing dormant relationships with international counterparts. The free movement of sea freight shipments is strengthening development of maritime trade and will significantly build income for Iranian companies looking to build greater export and import businesses. Ultimately, this builds Iran’s economic prosperity and job creation.
The long-term goal according to Banaei is of joining the top 10 ship-owning countries, giving the Iranian shipping and logistics industry resilience and longevity.
Steamship Mutual is one of the largest and most diverse P&I Clubs in the world; they are, say the Financial Tribune, also a member of the International Group of P&I Clubs participating in the International Group Pool.
Before sanctions were imposed on Iran, this International Group was a main insurer of Iran’s fleet. Steamship Mutual was the most favoured P&I Club amongst Iranian owners. When sanctions targeted Iran’s financial system, hitting Iranian banks, this cut off all insurance coverage, “effectively ending the relationship with P&I clubs in 2009”, said the Tribune.
IRISL was inevitably a direct target of sanctions, given Western fears that the company’s ships carried cargo that supported Iran’s ballistic missile and nuclear program. Thankfully for our partners the tide of international trade with Iran is now turning.
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