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United India Insurance Co. has agreed to provide protection and indemnity cover to Indian tankers carrying oil from Iran with General Insurance Corp. offering reinsurance.
The offer brings some relief to Indian shipping companies that aren't getting covers from European insurers since July 1 for carrying shipments from Iran, which is facing sanctions from the US and European Union for its decision to continue using its international nuclear rights.
An oil embargo by the European Union took effect on July 1 and bans firms from insuring Iranian shipments, forcing China and India to ask Iran's oil shipper, NITC, to deliver crude in its vessels.
Almost the entire Iranian fleet, the largest in the world, is employed for exporting oil cargos to various destinations now.
"We (shipowners) had asked for and have been offered a P&I cover of $50 million," a senior executive at state-run Shipping Corp. of India Ltd. said.
Domestic insurance firms are allowed to provide shipowners carrying Iranian oil $50 million in cover against pollution and personal injury claims, also known as protection and indemnity (P&I) insurance, Devli said. They will also provide hull and machinery cover of $50 million, to protect ships against physical damage.
General Insurance Corp of India will be the re-insurer and cover will be extended by any of four state-run non-life insurance firms: United India Insurance, New India Assurance Co. Ltd., National Insurance Co. Ltd. and the Oriental Insurance Co. Ltd.
"The cover is for all Indian shipowners," the executive said.
Both insurers are state-owned. India's oil ministry has been asking the country's Ministry of Finance to push General Insurance to provide cover to cargo shippers dealing with Iran.
India is expected to load around 300,000 barrels per day this month. India's Insurance and Regulatory and Development Authority has agreed to allow state-run insurers to replace their European counterparts, enabling at least Shipping Corp Of India to resume transporting Iranian oil, officials said.
"This is a classic case of how three Indian industries - insurance, shipping and oil - are coming together for the nation and its energy security," Anil Devli, chief executive of the India National Shipowners' Association, told Reuters.
Last month, Japan said its government would be able to back insurance plans for tankers carrying Iranian crude. South Korea, however, has indefinitely halted all oil imports from Iran.
Comment: With a withering economy in the US and several other Western nations, some countries who's livelihood isn't owned or controlled by the west are beginning to step up and take care of their energy needs despite cries of foul from the West.