The Japanese government has announced that it may offer policies for tankers from Iran.
The government of Japan has released an insurance news statement in which it announced that it may offer policies for tankers from Iran that bring in oil, and that they will go into effect in July when the European coverage ban takes effect.
The EU has been lobbied by Japan for exemption status on the coverage and reinsurance ban.
The ban was an element of the Western sanctions geared at decreasing the revenues of oil in Tehran in order to force it to stop its highly controversial nuclear program.
Officials have stated that the government of Japan is considering requesting that a law be enacted by parliament in order to make it possible to offer the coverage that was needed. Iran and powers from around the world started negotiations in Baghdad on May 23, in the hopes of making some progress in achieving a resolution to their disagreement over the country’s nuclear program.
A major Japanese newspaper had already reported that the government intends to submit a draft for the law to parliament at the beginning of June, in the hopes that it will be passed in time for the start of July. The current law in the country states that shipping companies must have liability insurance that covers against the damage resulting from various accidents, which includes everything from fatalities to oil spills. This is required in order to enter into Japanese waters.
The majority of these policies are issued by the Japan Ship owners’ Mutual Protection & Indemnity (P&I) Association, which is covered by the reinsurance provided by other P&I organizations and other insurers so that possible large claims will be fully covered.
The largest reinsurance market is made up of the insurers in the European Union, and they will be banned from providing coverage for the tankers transporting crude oil from Iran. Without being able to obtain reinsurance, the Japanese insurers will be able to offer liability coverage of up to only $8 million. Previous insurance news reports have stated that requests to companies in China to provide the coverage have failed.