International trade credit insurers are winding down the little business they had reinstated in Iran since 2016, in the wake of the re-imposition of US sanctions against Iran since 6 August.
Speaking to the trade finance magazine Global Trade Review (GTR) about the re-imposed sanctions, Ms Katayoon Valizadeh, a senior consultant in credit insurance and risk management in Tehran said, “After the announcement of the US sanctions, all private credit insurers who had some interests in dealing with the US stopped their covers on Iran. Now as far as I know, only export credit agencies (ECAs) continue to give cover to Iran.”
Based on local observations, it should not take too long for insurers to wind down their Iranian business, because they are largely only involved in short-term deals, she said.
Referring to the current levels of insurance cover in Iran, Mr Arash Shahraini, board member and deputy CEO of the Export Guarantee Fund of Iran (EGFI) told GTR that while he observed the return of large private credit insurers in the past two years, it was “not as fast as expected” after the implementation of the Joint Comprehensive Plan of Action (JCPOA) – also known as the Iran nuclear deal – in January 2016. He believes this is because European banks continued to be cautious of working with Iran, despite – in theory – being allowed to do so under the Iran deal. As a result, there has simply not been much business for credit insurers to cover.
According to him, the majority of bilateral finance agreements signed between Iran and other nations since the JCPOA “have not been practically implemented due to banking problems”.
Technically speaking, cover cannot be cancelled retrospectively, so companies should be able to use the insurance they have already subscribed to in case of default due to the re-implementation of sanctions.
Mr Rob Nijhout, executive director of the International Credit Insurance & Surety Association (ICISA) said, “As far as I am aware, sanctions do not apply retroactively, so any delivery prior to new sanctions is subject to the pre-sanction situation. If goods or services were delivered in line with policy conditions, namely in an insured manner when cover was in place, any non-payment resulting from that is covered and paid by the insurer. If exports are made after cover has been withdrawn, either on a buyer or on a country, these are not insured and cannot be claimed if a non-payment occurs.” M