Implications Of U.S. Withdrawal From Iran Nuclear Deal On (Re)insurance Industry

On May 8, 2018, President Donald Trump issued a Presidential Memorandum announcing his decision to withdraw the United States from its participation in the Joint Comprehensive Plan of Action (JCPOA), the agreement under which Iran committed to limiting its nuclear activities in exchange for sanctions relief from the U.S. and others. The Presidential Memorandum directed the Secretary of State and the Secretary of the Treasury to immediately re-impose all nuclear-related sanctions that were suspended when the JCPOA was implemented in January 2016.

The JCPOA significantly impacted the insurance and reinsurance industry. By lifting sanctions once applicable to vast sectors of the Iranian economy, the JCPOA facilitated opportunities for insurers and reinsurers that were previously unable to transact business in or with Iran, or that were required to sacrifice lucrative dealings with U.S. companies in order to do so. Recognizing Iran was ripe for new insurance and reinsurance products, global companies quickly entered the Iranian market. The President's recent decision to withdraw the U.S. from the JCPOA raises concerns as to the continued viability of those transactions. For instance, upon re-imposition of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), U.S. and non-U.S. entities may be restrained from providing insurance, reinsurance or underwriting services relating to any Iranian activity for which certain other sanctions are also being re-imposed. The NDAA will also require...