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US-Iran tensions: Indian insurers face the heat

With oil importers being forced to buy higher insurance covers for the crude being brought in, reinsurers are turning cautious.

January 15, 2020 / 03:54 PM IST

Indian insurers are facing the heat in the wake of recent events involving US and Iran. Even as oil importers are being forced to buy higher insurance covers for the crude transported to India, reinsurers are turning cautious by increasing premium.

Without adequate insurance, importing crude oil is very risky. Crude oil used in the production of a range of fuels is heavily imported by India and a drop in quantity impacts an array of industries including aviation, transportation and cosmetics/retail among others. Firms from the Middle East that export crude oil do so only once there is insurance available for the shipment by the importer.

"It is a tough period because treaties are also set to be renewed for providing reinsurance cover. Rates are going up and refiners have not agreed to the hike," said a senior insurance executive.

If crude oil import gets impacted, the prices of existing goods like petrol, jet fuel as well as cosmetics will increase. Companies exporting oil will not do so unless they have a complete insurance.