On 23 November 2013, the Joint Plan of Action was agreed between Iran and the E3/EU+3 (France, Germany, the UK, China, Russia and the US). Under this plan it was agreed that “limited, targeted, temporary and reversible” relief from certain sanctions measures would be granted to Iran, in return for Iran’s agreement to commence the winding-down of certain aspects of its nuclear program.
The situation now
On 20 January 2014, certain aspects of EU and US sanctions against Iran were suspended for a period of 6 months. If progress is made with the winding down of Iran’s nuclear program then there is the possibility of further relaxation; but if not, the relief can be lifted at any time. Despite the co-ordination of approach, the suspensions are not identical and care must be taken. Only the US extraterritorial sanctions program has been amended. The primary US sanctions applicable to US persons (and those owned/controlled by US persons) remain largely unchanged. For these persons, the near-blanket embargo on Iran remains.
Effect on the (re)insurance industry?
The suspensions lift certain sanctions connected to the (re)insurance of Iranian crude and petrochemical shipments. Hull, cargo and liability (re)insurance of shipments of crude oil to countries which already benefit from a US waiver to import crude oil and certain petrochemical exports from Iran (Japan, Turkey, India, South Korea, China and Taiwan) will now benefit from the lifting of sanctions.
All activities related to or arising from such permissible transactions must be performed within the six month window. As things stand, that is likely to have limiting effect on the relief available as obligations under a (re)insurance contract may well take longer to fully run-off. (Re)insurers will therefore have to look at each case on it facts. Even if it is feasible, any cover that is granted should include comprehensive sanctions exclusions and termination rights to take account of the fact that sanctions may be reintroduced at short notice. (Re)insurers who form part of groups listed on US stock exchanges should also bear in mind that sanctions-related SEC reporting remains unaltered with the prospect that permissible transactions may remain reportable, with the potential scrutiny this may draw.