Japan

Principal Legislation

• Health Insurance Law 1922
• National Health Insurance Law 1938
• Employees’ Pension Insurance Law 1944 (EPI)
• Medical Care Law 1948
• Law Concerning Non-Life Insurance Rating Organisations 1948
• Law on Insurance Solicitors (Intermediaries) 1948
• Law Concerning Foreign Insurers 1949
• Automobile Liability Security Law 1955
• National Pension Insurance Law 1959
• Law Concerning Earthquake Insurance 1966
• Insurance Business Law 1996
• Long-Term Care Insurance Law 1997
• Financial System Reform Law 1998
• Law on Sales of Financial Products 2000
• Consumer Contract Law 2001
• Defined Contribution Pension Law 2001
• Defined Benefit Corporate Pension Law 2001
• Pension Reform Law 2004
• Medical Care System Reform Law 2006
• Financial Instruments and Exchange Law 2006
• Insurance Law 2008
• Medical DX Promotion Infrastructure Development Add-on Law 2024 (mandating My Number Card adoption for health insurance ID)
• Revised Long-Term Care Insurance Law 2024 (deferral of service transitions and user fees to 2027)

Supervision

The insurance supervisory authority is the Financial Services Agency (FSA), a “super-regulator”, which is responsible for supervising the entire financial services sector under the authority of the Cabinet Office.

For non-life there are two principal insurance associations, the General Insurance Association of Japan and the Foreign Non-Life Insurance Association. All life companies are members of the Life Insurance Association of Japan. There is a pension association, the Pension Fund Association, and a health societies association called the National Federation of Health Insurance Societies (Kemporen).

Admitted/Non-Admitted

Non-admitted insurance is not permitted in Japan because the law requires insurance to be purchased from locally authorized insurers, with limited exceptions. Insurance intermediaries must hold a license to operate in Japan. Licensed brokers cannot place business with non-admitted carriers except for certain international risks.

Exceptions to the prohibition on non-admitted placements include:

• International marine cargo (excluding coastal cargo and inland transit)
• Hull and liabilities for Japanese ships and aircraft engaged in international trade.
• Overseas travel insurance

Compulsory Classes

• Compulsory automobile liability (CALI)
• Liability for maritime oil pollution
• Liability for nuclear risks
• Workers’ accident compensation for employees in industry and commerce (state scheme)
• Residential buildings defects liability insurance (cash deposit or insurance policy)

State Involvement

The state-owned Japan Post Holdings, which includes Japan Post Insurance, Japan Post Service, and Japan Post Network, was fully merged under a new holding company structure by 2023. The government is a shareholder and reinsurer of the Japan Earthquake Reinsurance Company. Japan Post Life, a life insurance organisation, is owned by the partially privatised Japan Post Group.

Tariff Classes

The only tariff classes are compulsory automobile liability insurance (CALI) and household earthquake insurance.

Premium Taxes and Charges

Insurance companies pay a JPY 200 stamp duty on each non-life policy they issue.

Policy Language

Policies may be issued in either Japanese or a foreign language, typically English.

There are 57 domestic direct insurance companies operating under the Insurance Business Law, 17 foreign branches, and nine insurance holding companies. Additionally, 41 co-operative insurance carriers operate under sector-specific laws. A total of 123 companies is registered as “small-amount and short-term” insurers (SASTI), a category created to encourage unregulated co-operatives to regularize their status and now also used by new niche insurers.

Japan has two domestic professional reinsurers, including the partly government-owned Japan Earthquake Reinsurance Company, which exclusively reinsures household earthquake risks. There are also two foreign reinsurance branches and several foreign reinsurer liaison offices. Direct non-life insurers, notably Tokio Marine, MS&AD, and Sompo, write substantial volumes of domestic reinsurance, mainly through pooled classes such as compulsory automobile liability (CALI) and household earthquake. The top three insurance groups are expanding their international inward reinsurance business, both by reinsuring their overseas affiliates and through specialist international reinsurance subsidiaries.

Despite the rise of competing channels, agents remain the bedrock of insurance distribution in Japan. The number of insurance brokers has declined as many find it challenging to secure transactional business from large corporations’ in-house agencies. The life insurance market continues to be dominated by insurers’ direct sales forces.

Japan has extremely high exposure to earthquakes, volcanoes, and tsunamis. The most frequent cause of property losses is windstorm, specifically typhoons, which mainly affect the household sector rather than industrial accounts. Typhoons consistently cause flood damage covered under windstorm extensions. Severe flooding can also result from intense tropical downpours or weather fronts associated with typhoons. Climate change trends indicate an increase in the frequency and intensity of these events, elevating flood and windstorm risks.