While I hesitate to say that the U.S. Government, or specifically the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), provides special treatment to anyone when it comes to the implementation and administration of U.S. sanctions, it does seem that there are some favorable carve outs or policies for insurers. For example, in a lot of the new sanctions legislation being passed by the U.S. Congress, there are exemptions for enforcement of sanctions against insurers that carry out good faith due diligence efforts. For example, in Section 1246 of the Iran Freedom and Counter-Proliferation Act (IFCA), Congress carved out such an exemption stating, “The President may not impose sanctions…..with respect to a person that provides underwriting services or insurance or reinsurance if the President determines that the person has exercised due diligence in establishing and enforcing official policies, procedures, and controls to ensure that the person does not underwrite or enter into a contract to provide insurance or reinsurance for an activity described in….[in various sections of the Act].” This type of language has been prevalent in recent sanctions legislation and is clearly favorable for insurers.

But it’s not just Congress that provides for policies favorable to insurers, OFAC has also offered guidance that seems to be in favor of insurers operating in the global market. Specifically, OFAC has publicly recognized that U.S. insurers compete in international markets where non-U.S. insurers are able to issue global insurance policies without U.S. sanctions exclusion clauses. Therefore, OFAC has determined that in cases where a sanctions exclusion clause is not commercially feasible, the insurer can apply for a specific OFAC license for the global insurance policy. OFAC will then review the facts and circumstances of the global insurance policy to assure that authorizing the policy without the exclusion will not undermine U.S. foreign policy. OFAC would also require the issuance of a separate license to pay claims arising under any authorized global insurance policy.

Insurer’s certainly have a great burden when it comes to complying with U.S. sanctions in a strict liability environment. As such, I can understand how the amount of risk undertaken by insurers could be seen as a mitigating factor in determining an enforcement response against an insurer that may have inadvertently violated the sanctions prohibitions. However, OFAC having a licensing policy in favor of authorizing global insurance policies without sanctions exclusion clauses tends to show a bias to the insurance industry versus other industries. That said, more power to the insurance companies. Insurers would be wise to take advantage of this licensing policy. OFAC regulations are comprehensive and broad and their favorable licensing policies are few and far between, so when they do exist it makes sense to apply for licenses to make your business more competitive.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or

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