Japanese insurers to halt ship insurance for all of Russia
Lack of coverage for war damage could have impact on Japan's LNG imports
Three Japanese insurers will stop insuring ships for war damage in all Russian waters on Jan. 1, a decision that could affect Japan's energy imports, Nikkei Asia reported.
Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance started to inform shipowners of their decision Friday.
The move, which comes about 10 months after the start of Russia's special military operation, was prompted by overseas reinsurance companies refusing to take on Russia-related risks.
The Japanese insurers' decision means that coverage for war damage will not be provided anywhere in Russian waters - even in the Far East, far from the war in Ukraine.
Nearly all vessels take out ship insurance. A lack of additional coverage for Russian waters would make sailing there too risky for most operators.
Japanese imports of liquefied natural gas from Russia's Sakhalin-2 project and elsewhere could be affected by the inability to secure coverage.
Shipowners have to sign up for extra war damage insurance before sailing through Ukrainian and Russian waters. Insurers would have to be notified in advance to follow up on terms for payouts and premiums. Starting next year, shipowners will no longer have that option from the three Japanese insurers.
The insurers' decision reflects the industry's widened view of risks. The perceived danger has spread beyond the Black Sea and the Sea of Azov, both close to the actual fighting.
In February, when the war broke out, London's Joint War Committee, which issues guidance for marine insurers, added waters around Ukraine to its list of high-risk areas. The panel includes members from the Lloyd's Market Association, which operates the world's biggest insurance market.
In April, the committee expanded the high-risk designation to include all of Russia.
The three Japanese insurers are expected to negotiate with reinsurance companies after the Christmas holidays on possibly restarting coverage.
