P&I Club in Iran

Mohammad Reza Mohammadi Banaei is currently Managing Director at Afra Marine Kish (IRISL In House Insurance Brokers). Taking advantage of Bsc in Maritime Studies and as a master mariner, he managed to govern Kish P&I club and H&M and P&I claims executive at IRISL legal & Insurance dept. in previous years. 17 years of Sea going experience on IRISL vessels along with being Associate member of Association of Average Adjusters and holding post graduate diploma in Marine Insurance from World Maritime University have enabled him to turn out to be a maritime insurance expert.

News ID: 69999

Date: 01 November 2016 - 12:14

MANA International correspondent managed to instruct an interview with him and elaborate on the P&I importance in Iran, the process of working with P&I club in Iran, and the capacities of Iranian insurance firms.

MANA: How effective is the role of Protection and Indemnity clubs on international business environment?

Shipping industry stands as a connecting medium in the international trade. To secure capital flows and engage with the parties involved in the industry; the shipping companies rely heavily on protection and indemnity they are receiving from P&I clubs. During past decade; due to some restrictions imposed unrightfully on IRISL group through unjustified sanctions; the group’s activities were mainly concentrated on Asian; local and niche markets. There are number of reasons which could be named in this regard but the role of international group of P&I clubs and termination of their cover is definitely outstanding.

The International group of P&I clubs are the main service providers to worldwide shipping within the scope of P&I insurance and corresponding services. In the recent decades; the concentration of the protection and indemnity services in the so-called “IG Group”; the group comprising of 13 biggest international P&I clubs; have turned the industry into a cartel where enjoying insurance cover from any P&I club within the group; is considered as the key to enter the international trade.

The P&I clubs’ roles and influences on shipping business environment have been considerably increased during recent years due to the obligations under International conventions on wreck removal, bunker oil pollution and Civil liability convention for the ship –owners to obtain a financial security in respect of its liabilities under conventions from a financial institute or an Insurer.

The port safety officials are also concerned about vessel P&I insurers .The reason is the management methods which have been performing by the IG clubs in different jurisdictions and their ability to respond to all types of claims financially as well as technically. Having the latter the port authorities would consider the P&I Insurers of the vessels as a means of loss control and risk mitigation.

As an IRISL employee, I hope that by obtaining P&I cover from International group the IRISL fleet vessels could easily trade worldwide.

The fact is that, having an internationally recognized P&I cover would pave the way for IRISL to reclaim its share from International shipping market.

Moreover, the IRISL policies towards expansion or renovation of fleet necessitates smooth access to financial markets and Mortgagee banks who would require vessel Insurers with a good solvency margin, reputation and track record to be named in the mortgage contracts in order to be able to issue undertakings to subject banks.

MANA: How do you evaluate the capacities of Iranian insurance firms in providing IRISL requirements?

I have to put an emphasis on the importance of Iranian insurance companies’ investment on marine risk assessment and identification.

It’s worth noting that in the process of evaluating the Iranian Insurance Market capacity in responding to IRISL and in wider terms to other Iranian shipping companies risk management requirements, one has to consider several factors besides Market capacity. These factors include but are not limited to the Insurers’ solvency standards, their ability to identify the risks they are exposed to and their capabilities in spreading or transferring the risks to regional as well as international markets.

MANA: What are the advantages of cooperation with foreign insurance firms in the post-sanctions era?

The Iranian Insurers shall be able to enter into co-insurance and re-insurance contracts with International Insurers and reinsurers.

Engagement of Iranian insurance entities with international Insurance market is something that our Insurance industry is definitely in urgent need of. This requirement along with their ability to distribute the risks internationally would enable the local insurers to utilize the capacities available in International insurance market for placing their accepted risks. The connection between the local insurance markets with the foreign companies is a key factor in development of Iranian Insurance Industry insofar as the quantity and the quality of services are concerned.

MANA: How is the situation of Iranian insurance companies rating process? Do we have any rating agency in Iran? And how we can check the foreign Insurance companies’ rating process?

By referring to the ranking of any insurance company, one can easily recognize how reliable the insurance company is in responding to its liabilities towards its clients. There are number of well-known financial rating agencies such as AM Best, Standard & Poor’s, Moody’s and Fitch and several others who are involved in ranking of the insurance companies based on their financial strength and stability. None of above agencies has been active in Iranian market up to now. There have been recently some negotiations between Iranian side and the Fitch agency on rating the Iranian Insurance companies. Although, Central Insurance of Iran; as the regulatory and supervisory authority in Iran; has been in charge of ranking the insurance companies as per solvency standards as described in bylaws issued by the Insurance high council.