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Insurers in Japan are expected to continue providing marine war coverage to liquefied natural gas (LNG) ships operating in Russian waters for at least three months, reported Reuters citing undisclosed sources.
Earlier, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, and Mitsui Sumitomo Insurance told ship operators that they would stop offering insurance because reinsurers were withdrawing support.
The marine war insurance covers damages to ships from armed conflict in Russian waters.
Following the insurers’ announcement, Japanese authorities asked the insurance firms to take additional risk and provide cover for LNG carriers.
The war cover is aimed at ensuring that Japan keeps getting LNG supplies from the Sakhalin-2 project in Russia to meet energy security needs.
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According to Nikkei, insurance companies have held talks with reinsurance firms to replace part of the coverage and they hope to provide continued coverage to LNG ships.
It added that after renegotiating with the UK reinsurers, a total of JPY30bn ($224m) is anticipated to be obtained, with domestic insurers covering roughly JPY8bn and foreign reinsurers taking on around JPY22bn.
With this, the number of ships that can be compensated at once is likely to be half of what it used to be because the additional underwriting capacity will be less than half of the previous JPY67bn, the report said, adding that shipping companies may need to reassess their operations.
The cover would last until March, the source told the news agency.
In a separate development last week, leading ship insurers said that they would not provide war-risk coverage in Russia, Ukraine, and Belarus from 1 January 2023.