Japanese companies to keep insurance for LNG ships in Russian waters
2022.12.27 08:10
Japanese companies to keep insurance for LNG ships in Russian waters
Budrigannews.com – According to a senior official at the industry ministry, the Japanese government has asked insurers to take on additional risks in order to continue providing marine war insurance to liquefied (LNG) shippers operating in Russian waters.
The unusual request was made in a joint letter to the country’s general insurance association by the Financial Services Agency and the Agency for Natural Resources and Energy. According to the official, Tokyo wants to make sure that Japan will continue to import LNG from the Sakhalin-2 project in Russia.
According to the official, “The FSA and ANRE have asked insurers to take actions to continue offering marine war insurance for the shipowners to transport LNG from Sakhalin-2 as it is key for Japanese energy security.” The LNG from Sakhalin-2 is transported by ships.
Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, and Mitsui Sumitomo Insurance informed shipowners on Friday that they would no longer provide marine war insurance, which covers damage to ships caused by war in Russian waters, beginning on January 1.
The decisions were made in response to a warning from reinsurance companies that they would no longer accept vessels’ wartime risks.
However, the three businesses stated on Monday that they are negotiating with additional reinsurers to provide cover.
Gazprom partially owns the Sakhalin Island complex in Russia’s Far East (MCX:) 9% of Japan’s LNG imports come from Japanese trading houses.
“Getting LNG is the main concern for the public authority, and we requested that insurance agency coordinate in such manner,” an authority at the FSA said.
Tokio Marine, Sompo Japan, and Mitsui Sumitomo spokespeople told Reuters in response to the letter that they will continue to seek additional support from reinsurers regarding war coverage in order to provide marine war insurance next year.
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According to sources in the industry, reinsurers, who insure the insurers, are proposing to exclude the Black Sea from policies beginning in January. As a result, insurers may refuse to cover planes flying to Ukraine or ships sailing through the sea.
After being impacted this year by losses related to the conflict and from Hurricane Ian in Florida, reinsurers typically renew their 12-month contracts with insurance clients on January 1. This provides them with the first opportunity to reduce exposure since the beginning of the war in Ukraine.
