Japanese insurers are expected to keep marine war insurance, covering the sinking and requisition of ships due to war in Russian waters for at least three months for LNG vessels.
ccording to Reuters, 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 LNG shippers.
This aims to ensure Japan will be able to import the fuel from the Sakhalin-2 gas and oil project in Russia’s Far East at the height of peak winter demand.
In fact, the insurance companies negotiated with reinsurers to replace part of the coverage and they are expected to enable continued insurance.
After renegotiating 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 overseas reinsurers taking on about 22 billion yen. However, the underwriting capacity will be less than half of the previous 67 billion yen.
As a result, the number of ships that can be compensated at any 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.
Reuters further reported that the cover would last until March.
Earlier in December, the Nikkei newspaper reported that Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance had decided to stop insuring ships for damage in all Russian waters due to the war in Ukraine.