European Union sanctions against Iran’s oil trade are expected to have a significant impact on the marine insurance industry, according to the International Group of P&I Clubs, a consumer association of marine insurance providers. In July, the EU’s sanctions will be enacted and will bar insurance companies from providing coverage to ships that are transporting Iranian oil. Companies that are unwilling to comply with the sanctions or cut ties with the nation are likely to pursue self-insurance, which could weaken the industry considerably as clients begin to exodus.
European insurers expect to see a loss in premiums as companies look for insurance coverage elsewhere. Lloyd’s of London, one of the world’s largest insurance groups with a strong presence in the maritime industry, suggests that the sanctions will be responsible for businesses moving to other markets. Indeed, some companies are already looking toward the insurance industries of Asia, Russia, and even Iran itself to find the coverage that they will be lacking in the near future.
If the sanctions have the dramatic impact on the industry that insurers expect, China will likely emerge as the primary power in the marine insurance market. The country’s insurance companies have enough economic clout to make such a move possible. Shipping companies may find the insurance they are looking for from China as the country’s insurers are likely to introduce new policies that are more attractive than those offered in the western markets.
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