We are writing to remind you of a market issue relating to coverage for flights to and from Iran and Cuba underwritten by US insurers or non-US subsidiaries of US parented insurers (US Insurers). The nature of this issue is such that it affects business placed by all brokers (wherever domiciled) where an insurance program is underwritten, in whole or in part, by a US Insurer.
Queries recently have been raised within the insurance market about the ability of US Insurers to provide coverage and pay claims with respect to global aviation risks for non-Iranian and non-Cuban insureds where coverage is provided on a worldwide basis and flights to and from Iran or Cuba are made during the policy period. More specifically, the queries relate to the scope of current US sanctions, which are enforced by the Office of Foreign Assets Control (OFAC), and how those sanctions apply to US Insurers covering such risks. What appears to have prompted the queries was a recent claim, involving another broker, relating to a flight out of a sanctioned country. We understand the US insurers are seeking to obtain permission from OFAC, through guidance or licence, to pay the claim.
As with all claims, for both US Insurers and non-US insurers and their subsidiaries, in determining whether to pay, insurance carriers will consider all of the facts and circumstances of the particular loss, including whether any payments may be prohibited by applicable sanctions. It is our understanding that all carriers have always taken the view that when claims payments under global aviation covers for flights to or from Iran or Cuba do not involve Iranian or Cuban governmental entities, Specially Designated Nationals, or otherwise involve sanctioned products or services, they will undertake all efforts to pay the claim, including, where appropriate, seeking guidance and/or permission from OFAC, the EU, or other sanctions-administering bodies to do so.
However, market discussions relating to the recent claim prompted us to send this letter. Specifically, we wanted to remind you that if you undertake flights to or from Iran or Cuba and your policy is underwritten partly or wholly by a US Insurer, that insurer may take the position that no cover is provided for those flights, subject to all facts and circumstances of the claim and the potential to pay under guidance or licence.
Willis Limited, which (along with other non-US Willis affiliates) is not currently prevented by US sanctions from placing coverage for non-Iranian and non-Cuban insureds (including coverage for flights to and from Iran and Cuba),* is exploring the availability of alternative coverage options that may help address this issue. In the meantime, you should feel free to confer with your Client Advocate about your own policy, how it may be affected, and what options may be available to you. We suggest you speak to your account team even if you do not currently fly to and from Iran and Cuba if you have any future plans to do so. Since coverage is specific, and the manner in which coverage applies to each client and each claim will depend on the individual facts and circumstances of that claim, you may also want to consult your own legal counsel about how US and other sanctions regimes could impact your coverage.
We hope that this letter helps to give you some insight into these issues and what they may mean for you. Your Willis team remains at your disposal to assist you with any queries or coverage requirements you may have
*Except where the circumstances of any specific risk indicate other sanctions or export controls may apply.