On 16 January 2016, the International Atomic Energy Agency confirmed that Iran had implemented its nuclear-related commitments under the Joint Comprehensive Plan of Action (JCPOA), which is the agreement related to Iran’s nuclear programme drawn up between Iran and the EU, US, UK, China, France, Russia and Germany.  As a result, this triggered legislation enacted by the EU, US, UN and others in October 2015, allowing for significant relief from EU and US secondary sanctions.

The extent to which insurers will be affected by sanctions relief depends on the sanctions regime(s) to which they, and the parties they deal with, are subject to and with which they should ensure compliance, for example, EU and / or US regimes.

EU Sanctions Relief

With effect from 16 January 2016 (Implementation Day), EU Sanctions were lifted for nuclear related sanctions in respect of:

  • Financial, banking and insurance;
  • Oil, gas and petrochemical sectors;
  • Shipping, shipbuilding and transport sectors;
  • Gold, other precious metals, banknotes and coinage;
  • Metals and software;
  • Financial sanctions removed for certain targeted individuals, entities and bodies

EU Sanctions still in force

There are certain sanctions that are still in place that impact insurance.  These include:

  • An arms embargo;
  • Trade control licensing requirements for export credit (re)insurance for export to Iran of certain goods and technology related to nuclear items, and graphite, metals and software designed for use in nuclear and military industries;
  • Proliferation-related sanctions (financial sanctions for targeted entities and individuals and trade);
  • Human rights and terrorism (financial sanctions for targeted entities and individuals)

US Sanctions Relief

With effect from 16 January 2016, many US secondary sanctions, which are those directed at non-US persons, have been lifted.  US primary sanctions applicable to non-US subsidiaries of US companies have been relieved to a similar extent to secondary sanctions by way of a general licence. US primary sanctions aimed at US persons remain in place with some limited exceptions.  The changes to the US sanctions regime include:

US secondary sanctions relief

  • US secondary sanctions (ie directed toward non-US persons) have been lifted for the following sectors: insurance; financial and banking; energy and petrochemical; shipping, shipbuilding, and port sectors; gold and other precious metals; and the automotive sector.  Associated services such as (re)insurance are also permitted.
  • Financial sanctions have been removed for certain targeted individuals, entities and bodies though a number remain on the Specially Designated Nationals (SDN) List and continue to be subject to secondary sanctions - meaning that non-US persons could also be designated as a SDN for knowingly facilitating certain transactions or providing support to listed Iran-related SDNs.
  • Certain of the individuals and entities that have been removed from the various US sanctions lists remain “blocked” to US persons who are still not able to engage in business with them.  Non-US companies and non-US entities owned or controlled by a US person are able to deal with these “blocked” entities (unless the transaction involves persons or activities for which sanctions remain in place).

US sanctions relief for US Persons and their foreign subsidiaries

  • The US Treasury’s Office of Foreign Assets control (OFAC) has issued “General License H” which authorises foreign subsidiaries of US companies to engage in most Iran-related transactions to almost the same extent that a non-US company can now engage in them, without triggering the possible imposition of US sanctions.
  • “General License H” also authorises US persons to establish or alter policies and procedures to enable their foreign subsidiaries to engage in Iran-related transactions as long as such activity does not trigger the general prohibition on approval or facilitation by a US person that would violate US sanctions.
  • In addition, there is a general licence now available for US persons authorising the importation into the US of, certain Iranian-origin foodstuffs and carpets and a favourable licensing policy has been established by OFAC under which US persons (as well as their foreign subsidiaries and non-US persons) may request a specific licence to engage in transactions for the sale of commercial passenger aircraft and related parts and services to Iran.
  • However there are some activities that the licence does not cover and that remain prohibited to foreign subsidiaries of US companies such as:
  1. dealing with SDNs;
  2. exporting from the US any goods or service to the Government of Iran;
  3. any transfer of funds to or from a US bank, activity subject to US Export Administration Regulations, ie goods containing 10% or more US-origin or US-controlled content;
  4. dealings with military, paramilitary, intelligence, or law enforcement bodies of the Government of Iran or affiliates;
  5. dealing in any activity that is sanctionable under US Executive Orders relating to Iran's proliferation of weapons of mass destruction and their means of delivery, including ballistic missiles;
  6. international terrorism; Syria; Yemen; or Iran's commission of human rights abuses;
  7. any nuclear activity involving Iran that is subject to the UN procurement channel (put in place further to the JCPOA) but that has not been approved through that procurement channel process.

In summary, non-US companies will not face exposure to US secondary sanctions for the provision of underwriting services, insurance, or re-insurance in connection with activities consistent with the JCPOA as briefly described above. Additionally, such activities can involve the individuals and entities that the US removed from the SDN List.  However, corresponding payments must be denominated in a currency other than US dollars (and such transactions must not otherwise involve US persons or US-origin goods, software or technology).

US Sanctions Still In Force

As the US primary embargo remains in effect, US persons continue to be unable to do business with Iran, with limited exceptions.  As a result, US persons cannot be involved in Iran-related dealings or transactions.  In addition, US banks, including US clearing banks, will continue to be required to reject or block all Iran-related funds transfers.  This means that non-US persons engaging in Iran-related transactions must denominate any corresponding payments in a currency other than the US dollar and not use US clearing banks.  To do so, could cause a bank to violate US primary sanctions and attract US regulatory enforcement.

US sanctions remain in place relating to Iran’s support for terrorism, regional destabilisation, human rights abuses, and ballistic missile programme.  The key remaining US sanctions targeting Iran under which non-US Persons could face exposure to sanctions include:

  • Non-US companies continue to face sanctions exposure for conducting significant transactions with Iranian persons on the SDN List including the Islamic Revolutionary Guard Corps (IRGC) and affiliates or those designated in connection with Iran’s proliferation of weapons of mass destruction (WMD) or support for terrorism.
  • Non-US companies continue to face sanctions exposure for certain activities related to trade in Iran regarding graphite, raw or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes that are outside the scope of the JCPOA and related waivers.
  • Blocking sanctions could be imposed on individuals and entities if they provide material support to persons engaged in certain activities such as those related to terrorism, human rights abuses and the proliferation of WMD, ballistic missiles. Therefore even if a non-US company insures an activity for which sanctions have been lifted, for example in the automotive sector, they could still be exposed to US sanctions if the transaction involves any of the above described sanctions remaining in effect.

Due diligence considerations

Lloyd's recommends a number of due diligence considerations when considering any potential Iran-related business, such as:

  • Case by case assessment alongside robust due diligence and screening including counterparties (and their corporate structures). Consideration of residual EU and US secondary sanctions and of potential reputational exposure;
  • Lead/follow Issues – contract alterations such as removal of territorial exclusions on policies, changes to sanctions clauses or binding a risk previously subject to sanctions, should be agreed by all underwriters on a slip with regard to all applicable Iranian sanctions before any commitment is made;
  • Legal advice for non-US subsidiaries of US persons if considering Iran-related business under “General License H”, ensuring there is no risk of facilitation by a US person;
  • Consideration of the snap back provisions and use of appropriate sanctions/exclusion clause(s) and /or rights of termination;
  • Ensure no involvement of US employees, other parties or banks or US origin goods (over de minimis content) etc. in any Iran-related transaction as US primary sanctions against Iran will continue to apply to US nationals employed by non-US companies;
  • Payments for Iran related business should not be made/denominated in USD where they relate to activities which are or would be prohibited under US primary sanctions against Iran;
  • Companies may wish to consider the implications of any activities that may become reportable to a US stock exchange under the US SEC reporting requirements;
  • Consideration of whether continuing sanctions inhibit the availability of reinsurance or retrocession cover;
  • Position of managing agents' banks - regardless of whether the bank is a US person or is owned or controlled by US persons, companies intending to undertake transactions involving Iran should liaise with their banks to determine whether they are willing to process the relevant transactions. The underwriting of Iran-related risks will not be possible if banks refuse to process financial transactions, either due to legal constraints or internal compliance policies;
  • The US’s visa-waiver program (VWP) will not apply to travellers to Iran.  Therefore nationals of a VWP country and dual nationals of a VWP country and Iran who have visited Iran, will require a visa to travel to the US for business or tourism, including an interview with a US consular official overseas. For that reason, if contemplating travel to Iran, it is recommended that a 10-year US Visa is obtained;
  • Referral of delegated underwriting or claims on any Iran related business to managing agent’s compliance function;
  • Consideration of money laundering and bribery risk;
  • Claims - payments to Iranian or Iran-related entities in connection with covers legally bound after Implementation Day will not be subject to sanctions. Likewise, payment obligations arising after Implementation Day in respect of a cover legally bound prior to Implementation Day may also be honoured, even if the payment is to an entity previously subject to sanctions. However, the sanctions relief implemented from Implementation Day does not have retrospective effect, and the payment of claims in connection with covers which were bound prior to Implementation Day in breach of the sanctions in force at the relevant time may still be illegal and legal advice should be sought as to whether such payment is permitted.


Iran sanctions remain complex and the risks associated with legal trade with Iran will require extremely careful management (both prior to entering into the arrangement in question and during it).  Caution should be taken when considering Iran related trade, treating each transaction on its facts, applying appropriate due diligence, ensuring no payments are made in US dollars and that relevant banks are able and willing to proceed with payments no matter what the currency. Insurers should keep up to date with guidance issued by the UK and US regulators which is expected to be subject to refinement in due course.