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Final US-Iran Sanctions Bill Could Impact International Insurers

Source: A.M. Best

Posted on 02 Mar 2010

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When Iran sanction legislation emerges from a U.S. congressional conference committee that is still negotiating the final version of the bill, its purpose will be to further pressure that country to curtail its nuclear ambitions. But the bill is also expected to affect the insurers who do business with Iran and underwrite its petroleum shipping.

The legislation that went into the committee expands existing sanctions in Iran, further severing economic ties between it and the United States but also prohibiting the U.S. government from doing business with firms involved in the Iranian energy market.

The language of the Senate bill bans activity "that could directly and significantly contribute to the enhancement of Iran's ability to import refined petroleum products, including underwriting or otherwise providing insurance or reinsurance for the sale, lease, or provision of such goods, services, technology, information, or support." The legislation also holds parent companies responsible for the actions of foreign subsidiaries and it bans certain significant levels of investment in Iran.

When floor debate began on the House version of the bill -- which passed 412 to 12 -- the member who introduced it, Foreign Relations Committee Chairman Howard Berman, D-Calif., said it would sanction foreign companies that sell refined petroleum to Iran, or help Iran with its own domestic refining capacity, by depriving those companies of access to the U.S. market.

James Craig, president of the American Institute of Marine Underwriters, said his group has been watching the bill but hasn't yet expressed a position.

Nine business organizations, including the Business Roundtable, National Association of Manufacturers, U.S. Chamber of Commerce and U.S. Council for International Business, sent a letter to White House officials expressing worry the bills that passed the House and Senate could have a wider unintended effect. "They could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed."