Japanese nonlife insurers to raise premiums for high-risk waterways in Ukraine

The Dnieper River that flows through the Ukrainian capital, Kyiv, is set to be added to a list of high-risk waterways by Japanese insurers, according to sources.

Major domestic nonlife insurance companies will add the river to the list as part of their war risks insurance for ships, which covers damage caused by war while a vessel is on the water.

Tokio Marine & Nichido Fire Insurance Co., Sompo Japan Insurance Inc. and Mitsui Sumitomo Insurance Co. will append updated clauses to new contracts from Saturday. The firms plan to drastically raise insurance premiums for militarily targeted areas in light of Russia’s intensifying military aggression in Ukraine.

Insurance contracts for such risks can be drawn up during peacetime to deal with unexpected situations and compensate for damage caused to crews and vessels.

Waterways thought to have an increasingly high risk of attack will be designated as “excluded zones” and insurance premiums will rise in line with the perceived risk level.

On March 1, the three companies also added to the list Ukrainian and Russian waters in the Black Sea and the Sea of Azov. However, due to the ferocity of the war in Ukraine, they decided to append rivers throughout that country, as well as southern Belarus and waterways near borders between Russia and Ukraine that serve as major transport routes. They also plan to expand the size of potentially targeted areas in the Black Sea.

The Zaporizhzhia nuclear power plant and other important facilities sit along the Dnieper River, which flows into the Black Sea. Recently, river traffic in and around Ukraine has plummeted. The insurance companies’ expansion of high-risk zones is thought to reflect the difficulty of underwriting insurance policies under the current situation.