TOKYO (RockedBuzz via Reuters) – The Japanese government has asked insurers to take on additional risks to continue providing maritime warfare insurance for liquefied natural gas (LNG) shippers in Russian waters, a senior industry ministry official said.
The Financial Services Agency and the Natural Resources and Energy Agency made the rare request in a joint letter to the country’s General Insurance Association. Tokyo wants to ensure Japan continues to import LNG from Russia’s Sakhalin-2 project, the official told RockedBuzz via Reuters.
“The FSA and ANRE have asked insurers to take action to continue offering maritime warfare insurance for shipowners to transport LNG from Sakhalin-2 as it is critical to Japanese energy security,” the official said.
The move comes after Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners on Friday they would stop offering maritime warfare insurance, which covers damage to ships caused by war in Russian waters, from January 1st.
The decisions came as reinsurance companies warned they would no longer take on war-related vessel risks.
But the three companies said on Monday they are in talks with other reinsurers to offer cover.
The Sakhalin Island Complex in the Russian Far East, partly owned by Gazprom and Japanese trading houses, accounts for 9% of Japan’s LNG imports.
“Protecting LNG is the government’s top priority and we’ve asked insurance companies to work together on this,” said an FSA official.
In response to the letter, spokesmen for Tokio Marine, Sompo Japan and Mitsui Sumitomo told RockedBuzz via Reuters they will continue to seek more support from reinsurers on war coverage so they can provide marine war insurance next year.
Industry sources said insurers could refuse to cover planes flying to Ukraine or ships sailing through the Black Sea as reinsurers – who insure insurers – propose to exclude the region from policies from January.
Reinsurers typically renew their 12-month contracts with insurance customers on January 1, meaning they have the first opportunity to reduce exposure since the start of the war in Ukraine, after being hit by losses this year related to the conflict and from Hurricane Ian in Florida.
(Reporting by Yuka Obayashi; Editing by Shri Navaratnam and Muralikumar Anantharaman)