The Japanese Government is seething over a New Zealand-registered company which has supplied insurance allowing North Korean cargo ships to continue to operate in its waters. The issue is now spotlighting NZ’s quaint 52-year-old company registration laws, which have allowed the company to call itself an insurer without bothering to register as one.

Japan has banned ships from its ports if they don’t have insurance to pay for oil spills and other accidents. The measure is aimed squarely at North Korea’s ramshackle cargo fleet, which has always sailed uninsured. Japan is trying to force North Korea to tell all it knows about the abduction of Japanese nationals in the 1970s and ’80s. Japan has also stopped all food aid and banned money transfers to the rogue state.

But an Auckland company, the Maritime Mutual Insurance Association (MMIA), has insured 16 North Korean ships, giving them access to Japanese ports and upsetting the Japanese Government. It wants an inquiry into the whole affair.

But even though MMIA isn’t actually registered as an insurer, the New Zealand Government says it can’t do anything about it. Under NZ law, it’s not illegal to register a company including the word “insurance”. And the company can operate legally as an insurer, as long as the business is conducted offshore.

It’s understood the principals of MMIA live in Liechtenstein and the island of Guernsey, and have never actually been to NZ. That doesn’t actually matter, because they haven’t broken any laws, anyway.

Insurance Council of New Zealand CEO Chris Ryan says the situation is ridiculous and brings the entire NZ insurance industry into disrepute. “We’re very concerned about this issue,” he said. “We’ve spoken to the Government about it, and we’re now trying to find out how widespread this problem is.”