The previous blog posting we put up on OFAC compliance for the insurance industry received quite a bit of positive attention, so I thought I would expand up on that blog and include some additional information related to sanctions administered by the United States Department of the Treasury’s Office of Assets Control (OFAC) which may be of use to those in the insurance industry. In this posting, I will highlight the top three (3) risks that insurers face from OFAC administered sanctions when providing global policies.

1. Insuring Foreign Persons: Obviously a major risk for insurers is providing global coverage to non-U.S. persons who may be involved in trade with sanctioned countries or persons. As such, it is important to understand who and what your are covering when dealing with insuring foreign parties involved in international trade.

2. Emergency at Sea: Insurance in the maritime industry can be tricky, particularly when an insured vessel has an emergency at sea that requires docking at a part of a sanctioned country or at a port that is managed by a sanctioned entity. For example, those insuring vessels that may find themselves in the Persian Gulf could have issues if a vessel is forced to dock at port in Iran or one run by Tidewater Middle East Co., a Specially Designated National (SDN).

3. OFAC Exclusion: Issuing a global insurance policy without an OFAC exclusion is prohibited. A common example of these types of clauses used in open marine cargo policies is “whenever coverage provided by this policy would be in violation of any U.S. economic or trade sanctions, such coverage shall be null and void.”

OFAC compliance for the insurance industry is one of the more advanced areas in terms of available information on the subject. However, due to the risks involved in insuring those parties who may have potential contacts with sanctioned nations, individuals, and entities, it is also an area that requires vigilant and up to date compliance measures. Those in the insurance industry charged with ensuring compliance with OFAC sanctions should keep as up to date as possible to the changes being made in relation to the sanctions programs and should work with outside counsel whenever necessary to resolve a complicated compliance issue.

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 ferrari@ferrari-legal.com.