April 18, 2006

China may buy insurance for seafood exports to Japan

China's Ministry of Agriculture is in negotiations with AIU Insurance Co through a third party to receive liability coverage for agricultural and fishery exports to Japan, the Nihon Keizai Shimbun reported.

The step is aimed to allay concerns among Japanese consumers on the safety of such products and thereby boost exports.

An insurance contract is expected by the end of this year with AIU, which is under the American International Group Inc. (AIG).

Compensation for damage caused by foreign substances mixed into food or by food poisoning can reach several hundred million yen a consumer. Since such incidents can involve dozens of consumers, the insurance is likely to make maximum payouts totaling about JPY5 billion (US$42 million) a case, the sources said.

The insurance will cover products of about 8,300 exporters and includes most Chinese farm and marine products exported to Japan, the sources said.

Chinese processed marine exports to Japan totaled about US$1.59 billion in 2005, up 8.1 percent from the previous year, according to Chinese government statistics.