Japanese insurers, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance, which are all 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.
The three insurers told shipowners that they would stop offering marine war insurance, which covers damage to ships from the war in Russian waters, from the 1st of January 2023.
Japan’s imports of liquefied natural gas (LNG) among other energy and commodities are set to be affected by the change. The insurers’ decision was prompted by global reinsurance companies saying they would no longer take on vessels’ risks related to the war.
A spokesperson at Tokio Marine commented, “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,” adding that some reinsurers have responded “positively.”
Meanwhile, spokespeople at Sompo Japan and Mitsui Sumitomo Insurance have suggested that the firms are also searching for new reinsurers.
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.
Disruption to fuel shipments will cause issues for Japan, which is heavily dependent on imports, particularly from Sakhalin.
The nation’s government has stressed the importance of Sakhalin-2 in maintaining the country’s energy security, especially as demand for heating fuel rises during the winter months.
Japanese shipping company Mitsui OSK Lines said it is gathering information, while another, 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, which is partly owned by Gazprom and Japanese trading houses, accounts for 9% of Japan’s LNG imports.
