General Insurance companies have stopped providing insurance coverage to goods — mainly crude oil — imported from Iran.
General Insurers in India including New India Assurance, United India and reinsurer GIC Re confirmed they have stopped providing insurance cover for Iranian cargoes, insurance sector officials said.
“Indian general insurers have stopped giving any cover for Iran oil cargo after May 8 and no existing cover is valid beyond November 4,’’ said an official.
Public sector insurers rely on reinsurance from India’s only reinsurer GIC Re, which in turn depends on reinsurance companies in both Europe and the US to hedge their risk.
European and US reinsurers dominate the global market and are increasingly wary of the risk of breaching sanctions. India is the second-biggest buyer of Iranian crude after China and without insurance coverage to protect their plants, the country’s refineries may have to cut down their imports earlier than anticipated.
“Right now the situation is very strict. (US and European) reinsurers are not giving any cover for Iran related activities,” said a source at GIC. Without the backing of global reinsurers, Indian insurance companies will find it difficult to manage the risk.
Indian oil companies are trying for insurance cover from Iranian firms, insurance officials said. The Centre had recently approved a proposal from Iranian private lender Bank Pasargad to open a branch in Mumbai. The Finance Ministry has conveyed to the Reserve Bank of India that it has no objection to allowing the Tehran-based Bank Pasargad to open its branch in India.
The clearance to the Iranian bank comes amidst the US announcing sanctions and asking other countries to minimise oil purchases from Iran.
