Governance, Risk and Compliance - The Japanese Insurance Industry

Governance, Risk and Compliance - The Japanese Insurance Industry


The Financial Services Agency (FSA) and the Local Finance Bureau of the Ministry of Finance (LFB) supervise and regulate the Japanese insurance industry. The FSA is the governing authority that supervises and regulates insurance activity in the country. It delegates part of its authority to the LFB, which is primarily responsible for providing licenses to insurance brokers. However, the Prime Minister is responsible for issuing or canceling licenses of insurance and reinsurance companies in Japan.

The Insurance Business Act 1995, the Order for Enforcement of the Insurance Business Act 1995, and the Insurance Act 2008 are the principal regulatory legislations to supervise the country's insurance and reinsurance activities. The Government promulgated the Insurance Business Act in 1939 and comprehensively revised it in June 1995, and the revisions came into effect in April 1996. The Act stipulates provisions for licensing, financial requirements, policy terms and conditions, and penalties for offenders. The definition of insurance business stipulated in the Insurance Business Act includes both insurance and reinsurance business; thus the FSA regulates insurers and reinsurers in the same manner in accordance with the provisions of the Act.

The Insurance Act 2008, promulgated in May 2008 and enforced in April 2010, regulates the relationships between insurers and the insured. A reinsurance contract is considered a type of non-life insurance contract, and is regulated in accordance with the provisions of the Insurance Act 2008. The Local and Central Government and certain government institutes issue public insurance contracts including worker's compensation insurance, health insurance, long-term care insurance, annuity insurance and trade insurance. The Insurance Act 2008 does not govern such classes of insurance. Furthermore, the Insurance Business Act is not applicable to insurance business carried out within a limited group of fewer than 1,000 individuals.

Key Findings -

  • The Financial Services Agency and the Local Finance Bureau of the Ministry of Finance regulate the Japanese insurance industry
  • 100% FDI is permitted in the Japanese insurance industry
  • Composite insurance is not permitted in Japan, however both life and non-life insurers are permitted to operate accident and health insurance business
  • Non-admitted insurance is not permitted in the Japanese insurance industry, with a few exceptions
  • Automobile liability, workers' accident compensation and nuclear risk liability are compulsory classes of insurance
The report “Governance, Risk and Compliance - The Japanese Insurance Industry” is the result of extensive research into the insurance regulatory framework in Japan. It provides detailed analysis of the insurance regulations for life, property, motor, liability, personal accident and health, and marine, aviation and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries.

The report brings together research, modeling and analysis expertise, giving insurers access to information on prevailing insurance regulations, and recent and upcoming changes in the regulatory framework, taxation and legal system in the country. The report also includes the scope of non-admitted insurance in the country.

  • Gain insights into the insurance regulatory framework in Japan.
  • Track the latest regulatory changes, and expected changes impacting the Indian insurance industry.
  • Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
  • Understand key regulations and market practices pertaining to various types of insurance product.
Reasons to buy
  • The report covers details of the insurance regulatory framework in Japan.
  • The report contains details of the rules and regulations governing insurance products and insurance entities.
  • The report lists and analyzes key trends and developments pertaining to the country's insurance regulatory framework.
  • The report analyzes the rules and regulations pertaining to the establishment and operation of insurance businesses in the country.
  • The report provides details of taxation imposed on insurance products and insurance companies.

1.1 What is this Report About?
1.2 Definitions
2.1 Legislation Overview and Historical Evolution
2.2 Latest Changes in Regulation
2.3 Legislation and Market Practice by Type of Insurance
2.3.1 Life insurance
2.3.2 Property insurance
2.3.3 Motor insurance
2.3.4 Liability insurance
2.3.5 Marine, aviation and transit insurance
2.3.6 Personal accident and health insurance
2.4 Compulsory Insurance
2.4.1 Automobile liability insurance
2.4.2 Workers’ accident compensation insurance
2.4.3 Liability insurance for nuclear risks
2.4.4 Liability insurance for residential building defects
2.4.5 Liability insurance for maritime oil pollution
2.5 Supervision and Control
2.5.1 International Association of Insurance Supervisors (IAIS)
2.5.2 Financial Services Agency
2.5.3 Local Finance Bureau of the Ministry of Finance
2.5.4 The General Insurance Association of Japan (GIAJ)
2.5.5 The Life Insurance Association of Japan (LIAJ)
2.6 Non-Admitted Insurance Regulations
2.6.1 Overview
2.6.2 Intermediaries
2.6.3 Market practices
2.6.4 Fines and penalties
2.7 Company Registration and Operations
2.7.1 Type of insurance organization
2.7.2 Establishing a local company
2.7.3 Foreign ownership
2.7.4 Types of license
2.7.5 Capital requirements
2.7.6 Solvency margin
2.7.7 Reserve requirements
2.7.8 Investment regulations
2.7.9 Statutory return requirements
2.7.10 Fee structure
2.8 Taxation
2.8.1 Insurance premium or policy taxation
2.8.2 Withholding taxes on premium paid overseas
2.8.3 Corporate tax
2.8.4 VAT
2.8.5 Captives
2.9 Legal System
2.9.1 Introduction
2.9.2 Access to court
2.9.3 Alternative dispute resolution (ADR)
3.1 Methodology
3.2 Contact GlobalData
3.3 About GlobalData
3.4 GlobalData’s Services
3.5 Disclaimer
List of Tables
Table 1: Insurance Industry Definitions
Table 2: Japan - Insurance Regulatory Framework Key Features
Table 3: Japan - Life Insurance Regulatory Framework
Table 4: Japan - Property Insurance Regulatory Framework
Table 5: Japan - Premium Rates for Earthquake Insurance for the year 2019
Table 6: Japan - Filed Base Premium Rates for Earthquake Insurance
Table 7: Japan - Motor Insurance Regulatory Framework
Table 8: Japan - Liability Insurance Regulatory Framework
Table 9: Japan - CALI Standard Full Rates for Different Types of Motor Vehicles (in JPY)
Table 10: Japan - Corporate Tax Rates for the Financial Year 2019
List of Figures
Figure 1: Germany- Insurance Supervision and Control at Various Levels
Figure 2: Germany- Insurance Regulatory Frameworks for Company Registration and Operation

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