Insurers set to benefit but need to be vigilant
Insurers and firms are already preparing to scoop up business in Iran whenever sanctions fall, according to insurance lawyers and accountants.
Mazars UK head of banking Rudi Lang said: “When going to Tehran it was obvious that many Western firms are already preparing the path. You hear more American accents than you would expect. You can bet there are fund managers waiting to run on the pitch.”
Lang added that the Iranian banking sector is in poor shape and that non-performing loans are high.
“Products offered and customer service is not state of the art,” he adds.
“The real issue is for the Central Bank. Anti-money laundering requirements are not meeting best standards. Iran has not introduced the Basel regime. So will they start with Basel II or go straight to Basel III?”
Lang added that banks will be hesitant without robust regulation, but added: “Nobody wants to miss the opportunity. German and Swiss banks are in the lead.”
Speaking at a British Insurance Law Association (BILA) event held at Lloyd’s, Debevoise & Plimpton international counsel Matthew Getz said: “While the first step of the proposed deal is estimated to take up to nine months, it nonetheless suggests that insurers may soon be presented with a window to a new market; for example, insuring transport of Iranian natural gas or insuring Iranian persons.
“Despite these positive developments though, insurers need to remain cautious and vigilant when dealing with Iran or Iranian persons.”
But Debevoise & Plimpton associate Konstantin Bureiko sounded a note of caution.
“Even if a deal is reached, Iran is likely to remain subject to extensive EU and US sanctions for the next few months,” he said. “In addition, any relaxations will likely be subject to onerous ‘snap-back’ provisions, which will re-implement sanctions if Iran fails to fulfil its obligations.
“US-owned insurers are subject to even more comprehensive restrictions, as they are required to comply with U.S. trade embargo on Iran, and Senate disapproval of lifting US sanctions on Iran makes their future position more uncertain.”
A recent report from Atradius said that Iranian trade sanctions could be lifted this as early summer and this would bring many insurance opportunities.
The report said that Iran could be the last ‘untapped’ frontier market.