US sanctions: Insurers warned over compliance risks

Heightened geopolitical tensions are creating an extremely challenging environment for insurers and brokers, as the US imposes sanctions on Turkish ministries and senior government officials in response to the country's military offensive in northern Syria.

Commenting on the insurance implications of the ongoing volatility in the Middle East and surrounding regions, specialist lawyers at Elborne Mitchell are warning of an increasingly complex web of considerations -- particularly for insurers in the EU.

“Insurers and brokers operating in the region will have to scramble to unpick exactly what has been imposed, on whom, and whether they trade with them, so that they do not inadvertently make unauthorised payments. For non-US corporations, understanding how they are affected by secondary sanctions is complex, with little practical guidance available from US authorities, and yet the financial consequences of not complying are severe – including heavy fines,” said partner the firm, Andy Stevenson.

“Navigating the web of US sanctions in this region is becoming increasingly complex for insurers and brokers and the weekend’s reported attack on an Iranian oil tanker in the Red Sea is the latest example," he added.

"US insurers are prohibited from dealing with Iran, but the situation for EU insurers is more ambiguous. If the ship was insured on the open market, it will raise many questions about the nature of the attack and whether sanctions exclusion clauses apply. Geopolitical volatility is showing no signs of abating, and we expect this to have an upward affect on pricing in the region.”

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