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Member, Beacon International Group, Ltd.
Some in the insurance sector see opportunity in the Middle East due to international sanctions against Iran being eased.
“Lloyd's recognizes that the Middle East presents opportunities both now and in the longer term,” Lloyd's of London Chairman John Nelson said during the January World Economic Forum in Davos, Switzerland, of Lloyd's setting up a platform in Dubai. “Following the change to the sanctions regime, there could be long-term opportunities in the region in the future as Iran integrates into the global economy.”
However, insurers still see Iran as a challenging business environment.
“Sanctions were not lifted in full, and substantial restrictions remain in place externally and internally in terms of considering business with Iran,” said Stuart Barrowcliff, New York-based vice president and senior underwriter of political risk and trade credit at XL Catlin, the marketing name of XL Group P.L.C.
“Some sanctions have been loosened, but most sanctions remain in effect, and appetite in the political risk insurance market is still limited,” said David H. Anderson, Washington-based senior vice president and director of global business development of credit and political risk at Zurich North America's credit and political risk unit.
Brokers see similar challenges.
“U.S. and E.U. sanctions relief is largely provided in the form of suspended rather than terminated sanctions. These suspended sanctions could quickly 'snap back' if Iran does not continue to meet its obligations,” said Stephen Kay, New York-based U.S. political risk and structured credit practice leader of Marsh USA Inc. “Political and credit risk insurers are therefore more likely to gradually tiptoe back to covering Iran, rather than to rush back in.”
Pricing for political risk insurance is soft despite the global business environment growing more perilous and limiting insurers' appetites for nations with active conflicts.