TOKYO, Dec 29 (Reuters) – Japanese insurers are expected to continue providing marine war insurance which covers the sinking and requisition of ships due to war in Russian waters after Jan. 1, the Nikkei daily said on Thursday.
Japan’s Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners last Friday that from Jan. 1 they would stop offering insurance coverage for ship damage caused by war in Russian waters, because reinsurers were withdrawing coverage.
But on Tuesday, a senior official at the industry ministry said the Japanese government had asked insurers to take on additional risks to continue providing war insurance for liquefied natural gas (LNG) shippers in Russian waters. This was to ensure Japan will continue to import the vital fuel from the Sakhalin-2 gas and oil project in Russia’s Far East.
The insurance companies negotiated with reinsurers to replace part of the coverage and they are now expected to be able to continue offering war insurance for LNG carriers, the Nikkei said.
After renegotiating with U.K. reinsurers, a total of 30 billion yen ($224 million) are expected to be secured, with domestic insurers covering about 8 billion yen and overseas reinsurers taking on about 22 billion yen.
But the underwriting capacity will be less than half of the previous 67 billion yen, according to the Nikkei.
Therefore, the number of ships that can be compensated at one time is likely to be about half of what it used to be, which means shipping companies may need to review their operations, the Nikkei said.
($1 = 133.6900 yen)
(Reporting by Yuka Obayashi; Editing by Emelia Sithole-Matarise)
(c) Copyright Thomson Reuters 2022.
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