Iranian insurance companies, with the support of the Russian side, have created a special consortium of insurance companies headed by Bimeh Markazi, the state-owned Central Insurance Company of Iran. They are ready to provide services to Russian and foreign companies involved in the sea transportation of Russian oil. Thus, Iran is ready to help Russia bypass Western sanctions, which, in addition to the embargo and the introduction of a ceiling on oil prices, imply a ban on the provision of financial, insurance and reinsurance services, writes RBC.
A representative of a partner company from the Russian side told the publication about the creation of the consortium: we are talking about a small company, Challenge Group – Insurance Consultants and Brokers. The company acts as the managing manager of the consortium. In addition to Bimeh Markazi, the association includes 12 Iranian companies: Alborz Insurance, Asia Insurance, Mellat Insurance, Parsian Insurance, Sina Insurance, Day Insurance, Tejaratno Insurance, Razi Insurance, Karafarin Insurance, Sarmad Insurance, Dana Insurance and Kowsar Insurance.
The listed companies account for about 48% of the Iranian market, and total assets amount to about $27.6 billion. However, for the Russian market, the volume of reinsurance opportunities is estimated at only about $100 million – this is clearly not enough for the Russian energy market. The representative of the Challenge Group, however, speaks of the great interest of Iranian insurers in the Russian market:
“Over 40 years of living under large-scale sanctions, Iranian insurers have learned how to work effectively with their own risks and have accumulated a lot of experience, knowledge and, most importantly, capital in this area, which they are now ready to share with Russian partners.”
Russian companies and their partners in maritime oil transportation in the near future will have to look for alternative ways to insure ships, because after the introduction of the oil embargo and the mechanism of maximum prices for Russian oil, companies that continue to cooperate with Russia despite the restrictions will lose financial and insurance support for supplies from Western companies.
The Russian authorities have already expressed their readiness to independently insure ships. However, this approach violates the principle of risk sharing, when insurance and the business itself are located in the same jurisdiction, which carries additional risks, and this creates additional restrictions for the business and significantly increases the cost of insurance. Western sanctions on Russian oil come into effect on December 5. The European Union introduces a complete embargo on Russian oil, as well as a ban on insurance and financial support for deliveries if oil in tankers is sold above the price of the established ceiling.