Japanese oil buyers will be forced to coordinate schedules after insurers warned they will cover only one tanker transporting Iranian oil at a time after the 1 July sanctions deadline.
The three major non-life insurers - Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance - are limited to how much marine coverage they can provide without reinsurance by European firms.
According to Reuters, the three insurers together can provide only up to ¥30bn ($370m) at one time in hull and machinery cover, which protects vessels against physical damage, without relying on the European reinsurance market to hedge the risk.
This is enough to cover insurance for only one tanker travelling in the Gulf with Iranian crude oil, Insurance Insight understands.
"The Japanese buyers who load Iran crude need to share information about schedules for loading. They haven't done so previously," an industry source told Reuters.
The insurers will be able to cover only three or four tankers of Iranian crude oil a month since each ship takes a week to 10 days to travel in and out of the Middle East, Reuters reports.
The Japan P&I club, the country's main ship insurer against environmental and third-party liability, has also been forced to reduce its cover for a tanker carrying Iranian oil to $8m from 1 July from the current $1bn due to EU sanctions.
Updating your subscription status
What is the claims environment like in Asia? What are insurers doing to manage increasing claims costs and is there sufficient expertise in the market to handle future claims?
Designing a multinational insurance programme is a complex undertaking. However, the right strategy and tools help optimise performance and boost bottom-line results. This Aon Benfield article addresses the key challenges to overcome, including cultural issues, regulations, business process management and risk.
Country Profiles provides individual summaries for Lloyd's key territories. These profiles contain factsheets on the economy, insurance market and Lloyd's business. This analyst report from September 2012 focuses on Singapore.