BEFORE BOURSE THERE WAS INSURANCE

Japan insurers in talks with reinsurers to resume coverage in Russian waters

December 27, 2022

CNA – Three Japanese insurance companies that are set to halt marine coverage of risks related to the war in Ukraine starting next month are in talks with reinsurers to resume those operations, they said yesterday.

Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance on Friday told shipowners that they would stop offering marine war insurance, which covers damage to ships from war in Russian waters, from January 1, spokespeople at the companies said. Their comments confirmed local media reports on Saturday.

The change could affect Japan’s imports of liquefied natural gas (LNG) among other energy and commodities.

The insurers’ decision was prompted by global reinsurance companies saying they would no longer take on vessels’ risks related to the war, which began in February.

“We are negotiating with various reinsurers to get the war coverage in order to restart providing marine war insurance in the area to our customers,” a spokespeople at Tokio Marine said, adding that some reinsurers have responded “positively”.

Sompo Japan and Mitsui Sumitomo Insurance are also searching for new reinsurers, their spokespeople said.

Most vessels get two types of insurance: marine insurance covering damage from natural disasters and collisions, and marine war insurance covering damage from war or terrorism.

Without marine war insurance, shipowners may give up operations in Russian waters, including picking up LNG from the Sakhalin-2 gas and oil project in Russia’s Far East.

Japanese shipping company Mitsui OSK Lines said it is gathering information.

Nippon Yusen will cooperate with the government and business partners, a spokesperson said when asked about its shipping plan from Sakhalin-2.

The Sakhalin Island complex, partly owned by Gazprom and Japanese trading houses, accounts for nine per cent of Japan’s LNG imports.