Civilian shipments to Iraq hampered by insurer fears

Monday, July 5, 2004

ABU DHABI Gulf Arab insurers continue to cut back on coverage for cargo shipments to Iraq.

Industry sources said leading insurers in the Gulf Cooperation Council have significantly reduced war risk coverage to insure business to or in Iraq. The sources said the refusal to provide such insurance has hampered the supply of civilian cargo to Iraq.

In April, GCC insurers decided to suspend coverage for cargo destined for Iraqi transports, Middle East Newsline reported. The sources said the insurers were willing to insure cargo until the Iraqi port. But from the port, the cargo would not have been insured.

GCC insurers have been led by the industry in Bahrain. Insurance companies in Bahrain were expected to benefit from a new Saudi law that would open the kingdom to foreign firms.

International insurers, such as Lloyds of London, have been willing to provide some war coverage. But the lack of competition drove up the price of war risk coverage.

GCC insurers have offered coverage to preferred clients when backed by massive reinsurance support from Lloyds, the sources said. They said the premium could amount to 100 times the normal war risk premium in other countries.

Copyright 2004 East West Services, Inc.

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