State-run insurance companies in India will indemnify local ships carrying Iranian oil. The move will help India get the much needed crude oil while Iran will be able to push their oil exports getting the imperative revenue.
We have in writing from General Insurance Corp that it and four other insurers will provide a cover of $50 million (30 million pounds) to Indian flag carriers per Iranian voyage, Sunil Thapar of Shipping Corp of India, the country's largest shipping firm, was quoted as saying by Reuters.
The Indian insurers' move will help Tehran circumvent the US and European Union's sanctions levied on it.
The new European Union sanctions targeting the Iran oil exports ban the EU insurers and re-insurers from providing insurance service to ships carrying Iranian oil anywhere in the world from July.
Three other top oil Iranian oil buyers from Asia-China, South Korea and Japan have also considering options for giving limited insurance cover to the ships transporting Iranian oil.
China earlier had said that it was mulling over granting sovereign guarantees for its ships to import oil while Japan had offered $8 million in insurance cover for the purpose.
Chinese companies would be the most negatively affected by EU sanctions as most of their shipping majors are insured by EU insurance companies.
We are paying great attention to this, the country has the need for oil and it's our responsibility to move the crude. But we need a solution from the government so we can avoid such risk, Zhang Shouguo, secretary general of China Shipowners' Association, told Reuters.
Though Indian insurers are offering to be the re-insurer and the coverage liability is limited, it will help Indian ships recover a fraction of the losses that arise in case of a mishap.
The shipping industry indicated last month that Indian ships would continue to transport Iranian oil even if the tight western sanctions exposed them to financial risks.