To ensure the uninterrupted supply of crude oil from Iran, government has directed public sector general insurers to provide insurance cover to ships carrying crude oil from Iran. However, it will be subject to due diligence of assets and fixing of premium as in the normal course.
Iran is facing sanctions from U.S.A. and European countries over its nuclear programme. At present cover for Indian ships carrying crude from Iran is provided only by western insurance companies, which plans to withdraw it from first July 2012 to tighten sanctions.
In its directive finance ministry has said that general insurers can seek reinsurance from other reinsurers operating in countries that are importing oil from Iran. There are some countries in south-east and central Asia that are importing crude from Iran.
However, finance ministry also said that no decision has been taken on General Insurance Corporation of India’s (GIC) request for $100 million sovereign guarantee. As per government it doesn’t see any case for it.
Cost of insurance cover for hull and machinery, and protection and indemnity insurance works out to about $200 million. As per GIC, it has made arrangements through their own sources and foreign reinsurers for around $100 million and they are seeking remaining amount from the government.
Earlier government was considering sovereign guarantee for Indian vessels so that supply of crude is not hit.
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