Japanese insurers are expected to have war insurance at sea, which covers the sinking and requisition of ships due to war in Russian waters for at least three months for liquefied natural gas (LNG) ships, industry sources said Friday.
Japan’s Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners last Friday that they would stop offering insurance coverage for ship damage caused by war in Russian waters from January 1, as reinsurers pulled coverage.
But on Tuesday, a senior official in the Ministry of Industry said the Japanese government had asked insurers to take on additional risks to continue providing war insurance for liquefied natural gas (LNG) shippers.
The exodus of ship insurers from risks between Russia and Ukraine is gaining momentum
This was to ensure that Japan can import the fuel from Russia’s Far East Sakhalin-2 gas and oil project at the height of peak winter demand.
The insurance companies negotiated with reinsurers to replace some of the coverage and are expected to continue the insurance, Nikkei reported Thursday.
After renegotiation with UK reinsurers, a total of 30 billion yen ($224 million) is expected to be secured, with domestic insurers covering about 8 billion yen and foreign reinsurers covering about 22 billion yen, it said.
But added, the underwriting capacity will be less than half of the previous 67 billion yen.
Therefore, the number of ships that can be offset at any given time will likely be about half what it used to be, meaning shipping companies may need to review their operations, the Nikkei said.
Industry sources confirmed the Nikkei report on Friday, telling Reuters that coverage would last until March.
($1 = 133.6900 yen)
(Reporting by Yuka Obayashi and Ritsuko Shimizu; editing by Emelia Sithole-Matarise and Barbara Lewis)
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