KUALA LUMPUR — August 17, 2017: The setting up of Energas Insurance (L) Ltd., the sole captive insurer of Petronas, has enabled the national oil company to tap sanctioned countries like Sudan, Cuba and Myanmar.
As a captive, the company is able to write risks in the sanctioned nations that are not covered by conventional insurers backed by the United States.
“It is easier for the group to tap those sanctioned countries because we know that if there is a need for insurance, the captive will be there to provide the coverage that is unable to be provided by traditional insurers due to the sanctions,” said Energas Chief Executive Officer Raziyah Yahya to Bernama today on the sidelines of the Asian Captive Conference 2017.
Under the US Treasury’s Office of Foreign Asset Control’s rules, any international insurers with capital backers or shareholders not from the US cannot write any risks in a sanctioned country.
“When they cannot write the risks, we are unable to fully insure our risks in those countries, so the captive can act as a capacity provider in that respect.
“And this is one of the benefits of setting up a captive,” she said.
A captive is an insurance or reinsurance entity, wholly-owned directly or indirectly by an industrial, commercial or financial entity, that provides insurance or reinsurance coverage for the risks, assets and liabilities of its parent company.
At a panel session earlier, Raziyah said the establishment of Energas in Labuan has enabled Petronas to save the insurance premium costs.
Prior to that, Petronas had to fork out about RM1 billlion yearly for insurance premium to other conventional insurance companies.