COUNTRYCOMPARATIVEGUIDES 2023

The Legal 500
Country Comparative Guides

Japan
INSURANCE & REINSURANCE
Contributor
Chuo Sogo Law Oﬃce
Hironori Nishikino
Partner | nishikino_h@clo.gr.jp
Koji Kanazawa
Partner | kanazawa_k@clo.gr.jp

This country-speciﬁc Q&A provides an overview of insurance & reinsurance laws and regulations applicable in Japan.
For a full list of jurisdictional Q&As visit legal500.com/guides

Chuo
Sogo
Law
OfficeInsurance & Reinsurance: Japan

JAPAN
INSURANCE & REINSURANCE

1. How is the writing of insurance
contracts regulated in your jurisdiction?
Writing of insurance contracts is regulated by the
Insurance Business Act and the Financial Services
Agency (the “FSA”) supervises insurance companies.
Oﬀering new insurance products requires approval fromthe FSA, (“Insurance Product Approval” – regularprocessing takes 90 days, standardised 45 days).
However, regarding certain types of insurance where
there is little fear of insuﬃcient policyholder protection,such as ﬁre insurance, a notiﬁcation system to theregulatory authorities has been adopted, although
notiﬁcation may not be required in cases where
insurance companies state in the statement of businessprocedures that special provisions related to businessinsurance are to be established or modiﬁed without
notiﬁcations. (“Flexible Provision System”).

their oﬃcers, employees and other personnel) may
conduct “insurance solicitation.” In principle, in thecurrent legal system, life insurance agents operate
within the so-called “one-company exclusive system”,
meaning they may deal with the insurance products of
only one insurance company. However, by fulﬁlling theprescribed legal requirements (such as enrolling two or
more life insurance agents), it is possible to deal with theinsurance products of multiple insurance companies,
with quite a number of independent agencies currently
doing so.
The situation involving non-life insurance companies(including reinsurance companies) is as follows:Oﬃcers (other than auditors) and employees
of a non-life insurer may engage in “insurance
solicitation” without being registered nor any
notice thereof.
Registered non-life insurance agencies as wellas their oﬃcers (with the exception ofauditors) and employees may engage in“insurance solicitation.” No oﬃcers or
employees of non-life insurance agencies are
required to be registered, but they are
required to give notice of such a fact.

2. Are types of insurers regulated
diﬀerently (i.e. life companies, reinsurers?)
Life insurers and non-life insurers are both regulated by
the Insurance Business Act. Reinsurers are regulated in
the same way as nonlife insurers. Engaging in theunderwriting of life insurance and non-life insurance
entails obtaining from the regulatory authorities a life
insurance business licence and a non-life insurance
business licence, respectively. Companies may not run
both businesses concurrently.

Unless otherwise permitted by any other laws, theInsurance Business Act prohibits any person from acting
as an agent or intermediary to solicit insurance
contracts, an activity which falls under the deﬁnition of“insurance solicitation” under the Act.

Registered insurance brokers may also engage in“insurance solicitation” (limited to mediating conclusionsof insurance contracts). The Insurance Business Act has
assigned special duties to such insurance brokers,
including the duty to deposit a security guarantee (JPY20
million at the time of commencement of their business,
which payment can be exchanged for an insurance
brokers’ liability insurance policy), the duty to disclose
fees and commissions, the duty to prepare bought andsold notes, the duty of loyalty (the duty of “bestadvice”), and other special duties that have not been
imposed on insurance agents.

In the case of a life insurance company, only registeredlife insurance agents (ie, oﬃcers and employees of a life
insurer; or life insurance agencies (agents) as well as

4. Is authorisation or a licence required
and if so how long does it take on average

3. Are insurance brokers and other types ofmarket intermediary subject to regulation?

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Insurance & Reinsurance: Japandiscriminatory treatment with regard to
insurance premiums.

to obtain such permission? What are thekey criteria for authorisation?
Engaging in the underwriting of life insurance and nonlife insurance entails obtaining from the regulatory
authorities a life insurance business licence and a nonlife insurance business licence, respectively. The FSA
endeavors to complete its review of license application
procedures within 120 days after a license application
reaches to the FAS (which is a standard processing
period under Article 246 of the Order for the
Enforcement of the Insurance Business Act). An insurers
who lay out a plan for obtaining a license, however,cannot normally rely on this standard processing time,ﬁrst, because it only obligates the FSA to make an eﬀort
to meet that deadline, and second, because theirnegotiations with the FSA begin by an exchange of drafts
preceding in the formal ﬁlling of documents for the
license application – in fact, it is common that no formal
documents for the license application are ﬁled before
obtaining an acknowledgement from the FSA.

5. Are there restrictions or controls over
who owns or controls insurers (including
restrictions on foreign ownership)?
Under the Japanese regulatory framework, shareholders
who own a certain percentage of voting rights in insurers
are subject to oversight by the regulator.
A shareholder with more than 50% voting
rights in an insurance company is required toobtain approval from the FSA in advance ofacquiring such voting rights (Insurance
Holding Company; Article 271-18-1 of the
Insurance Business Act). Insurance Holding
Companies are subject to strict regulations,
including those regulating the scope ofbusiness and imposing subsidiary restrictions,and, in certain instances, reporting
obligations.
Apart from Insurance Holding Companies, ashareholder with 20% or more voting rights in
an insurance company requires approval fromthe FSA in advance of acquiring such voting
rights (Major Shareholder of Insurance
Companies; Article 271-10-1), even if suchinvestor resides overseas. The FSA oversees
Major Shareholders of Insurance Companies
by imposing reporting obligations and taking
administrative dispositions.
A shareholder with more than 5% voting
rights in an insurance company is required toreport the acquisition of such voting rights to
the FSA within ﬁve days (or one month in thecase of foreign investors) (Shareholders with
Large Voting Rights in Insurance Company;
Article 271-3-1 of the Insurance Business Act).
That shareholder has to submit a report if
their percentage of voting rights changes by
1% or more (either as an increase or
decrease). The FSA may take administrative
dispositions against Shareholders with Large
Voting Rights in an Insurance Company if it
ﬁnds that the submitted report includes false
information, or lacks important or necessary
information, thus causing a potential
misunderstanding.

The key criteria for licencing under the Insurance
Business Act are, among other things, as follows:i. the person ﬁling application for the insurance
licence has a suﬃcient ﬁnancial basis toperform insurance services soundly andeﬃciently, and has good prospects for income
and expenditures in connection with thoseservices;ii. in light of such points as its personnel
structure, the applicant has the knowledge
and experience to perform insurance services
appropriately, fairly, and eﬃciently, and has
suﬃcient social credibility;iii. the contents of the insurance contracts haveno risk of lacking in protection for thepolicyholders, the persons to be insured,
beneﬁciaries of insurance proceeds, and otherrelevant persons;iv. no speciﬁc persons are subject to unfair ordiscriminatory treatment under the contentsof the insurance contracts;
v. the contents of the insurance contracts poseno risk of encouraging or inducing conductthat is harmful to public policy and good
morals;vi. the rights and obligations of the Policyholders,etc. and other contents of the insurance
contracts are speciﬁed clearly and simply for
the Policyholders, etc.;vii. the calculation procedures for insurance
premiums and policy reserves are reasonable
and proper, based on actuarial science; andviii. no speciﬁc persons are subject to unfair or

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6. Is it possible to insure or reinsure risks
in your jurisdiction without a licence or
authorisation? (i.e. on a non-admitted

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Insurance & Reinsurance: Japan

independent accounting calculation, and (ii)process the required administrative work
related to the underwriting of insurance
policies in Japan.
Except in certain cases, a foreign insurancecompany will have to underwrite insurance
policies pertaining to persons either domiciled
or residing in Japan or to property located inJapan at its Japanese branch oﬃce or someother Japanese legal entity.
Licensing criteria for overseas insurancecompanies are generally the same as thosefor domestic insurance companies.
The licensing criteria include the following:
In the case of a foreign life
insurance business license, theapplicant must have positive net
income for one business year inJapan within ten business years
after commencement of business.
In the case of a foreign non-life
insurance business license, theapplicant must have positive net
income for one business year inJapan within ﬁve business years
after commencement of business.

basis)?
For the following insurance contracts, foreign insurers
may conclude insurance contracts without obtaining theapplicable license:
1. Reinsurance contracts;
2. Marine insurance contracts pertaining to
objects such as vessels with Japanesenationality used for international maritime
transportation;
3. Aviation insurance contracts pertaining toaircrafts with Japanese nationality used forcommercial aviation;
4. Insurance contract pertaining to launching
into outer space;
5. Certain insurance contracts covering cargo
located within Japan which is in process of
being shipped overseas; and6. Overseas travel insurance.

7. Is a branch of an overseas insurer,
insurance broker and/or other types ofmarket intermediary in your jurisdiction
subject to a similar regulatory framework
as a locally incorporated entity?
A Japanese branch of an overseas insurer is subject tothe similar regulatory framework as a Japaneseincorporated insurance company, except some points
such as a governance structure requirement. An
overseas insurer is required to conduct insurance
businesses through its Japanese branch with licensefrom the Japanese government, and may not undertake
insurance contracts directly from foreign countries.
Overseas insurance brokers are subject to theregistration requirements under the Insurance Business
Act to the extent they conduct “insurance solicitation” inJapan.

8. Are there any restrictions/substancelimitations on branches established byoverseas insurers?
To engage in insurance business in Japan, an
overseas insurance company must establish alegal entity such as a branch oﬃce in Japanand obtain a business license from the Prime
Minister of Japan.
In addition to having physical presence as asales base, a branch oﬃce is required tocomply with supervisory regulations under the
Insurance Business Act. For example, abranch oﬃce should (i) maintain books for

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9. What penalty is available for those who
operate in your jurisdiction without
appropriate permission?
A person who engages in the business of insurance
without a license is subject to punishment byimprisonment with work for not more than three years ora ﬁne of not more than 3,000,000 yen (cumulative
imposition thereof as the case may be) (Article 315, item
1 of the Insurance Business Act).

10. How rigorous is the supervisory andenforcement environment? What are the
key areas of its focus?
Based on the Insurance Business Act, the regulatory
authorities have the power to issue administrative
dispositions to insurance companies, including orders
mandating (a) changes to basic documents, (b) business
improvement, (c) suspension of business, or (d)cancellation of a licence. In fact, a broad discretion has
been given to the regulatory authorities, and theadministrative dispositions against insurance companies
invoked by the regulatory authorities are not necessarily
based on the assumption that violations of law by
insurance companies have taken place. With that as a
background, entities targeted for supervision not only

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Insurance & Reinsurance: Japanof insurance, for example, by preventing salesof insurance products with the primaryobjective of tax savings (tax avoidance), the
FSA will conduct workable product screening
and monitoring of insurance solicitation
through closer cooperation with the National
Tax Agency (NTA).
In light of the recurrent misconduct by inhouse sales representatives, the FSA willencourage insurance companies to build aworkable system for managing sales
representatives. On the other hand, incooperation with the local ﬁnance bureaus,
the FSA will hold dialogues with the parties
concerned regarding the promotion of
insurance solicitation by taking the public
insurance system into consideration or
sophistication of the insurance agency
management system, so that insurance
services catering to diverse needs ofcustomers are readily available.
With regard to small-amount and short-term
insurance providers, the FSA will work withlocal ﬁnance bureaus to review theirmonitoring methods, identify problems related
to their ﬁnancial strength and appropriatenessof their business operations, and takemeasures in respect therefor at an earlystage.

have to make sure that laws and regulations are being
observed but also must follow the guidelines oﬃciallypromulgated by the regulatory authorities (seeComprehensive Guidelines for the Supervision of
Insurers; the “Guidelines”).
According to The FSA Strategic Priorities, July 2022-June
2023:

In view of the changes in the medium- andlong-term business climate, such as theincreasing aging of the society, theintensiﬁcation of natural disasters, and theshrinking automobile insurance market,
insurance companies are required to:a. conduct eﬃcient business operations throughdigitalisation,b. build sustainable business models, andc. develop products catering to the changing
customer needs.
As insurance companies continue to expand
their business overseas, it is important thatthey clarify their strategies for incorporating
growth from overseas expansion, along withmaking improvements to their group
governance. The FSA will facilitate the steadyprogress of such eﬀorts through dialogue, in
co-operation with overseas authorities.
The frequent occurrence of natural disasters
over recent years has resulted in increased
payments of insurance claims, and thesubsequent rise in the ﬁre insurance premium
rates. In particular, in view of the growinginterest in the risks associated with surging
ﬂoods, the FSA will hold dialogues with theparties concerned toward risk-based
segmentation of water disaster insurance
premium rates, as well as collaborate withthem in disseminating risk information to
spread the knowledge of water disasterinsurance and in combating fraudulent
business that capitalises on disasters.
In response to the environmental changes
referred to above, the FSA will examine thedetails of the economic value-based solvency
regulations while monitoring the progress oforganisational development within insurancecompanies, with a view toward achieving
seamless transition to a new policy ofsoundness based on the regulations
mentioned above.
In order to keep product development andsolicitation activities true to the original intent

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11. How is the solvency of insurers (andreinsurers where relevant) supervised?
Insurance companies are required to accumulate policy
reserves and appoint an insurance administrator with apredetermined actuary’s license, who gets involved inwork related to actuarial science.
Regulations on the solvency margin ratio wereintroduced in 1996, and the solvency margin index has
become an assessment standard for the supervisory
authorities to execute early corrective actions, withbroad supervisory reach against targeted companies,
including orders to submit an improvement plan. The
solvency margin ratio has been introduced on aconsolidated basis.
Field tests of economic value-based solvency regimes
have been conducted three times in the past, and themost recent ﬁeld test – the results of which wereannounced in March 2017 – was conducted inaccordance with the ICS ﬁeld test speciﬁcations of IAIS
(as of June 2016). In March 2016, the European Union
announced its adoption of the equivalence recognition
between Solvency II with temporary equivalence and theJapanese reinsurance supervision and group solvency.

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Insurance & Reinsurance: Japan

12. What are the minimum capitalrequirements?
The minimum amount of capital of an insurancecompany is 1,000,000,000 yen (Article 6 of the
Insurance Business Act, Article 2-2 of Order for
Enforcement of the Insurance Business Act).

13. Is there a policyholder protection
scheme in your jurisdiction?
The following policyholder protections are available:
1. Procedures allowing to change insurance
policy terms by voluntary agreement between
an insurance company and a policyholder incases where it would be diﬃcult for suchinsurance company to continue its insurance
business.
2. Procedures allowing the Prime Minster toorder
an insurance company to take necessary
measures, such as suspending its business or
consulting on the transfer of insurance
contracts, orthe management of an insurance company’sbusiness and property by an insurance
administrator in cases where it would be
diﬃcult for such insurance company tocontinue its insurance business.
3. Procedures allowing the Prime Minister todesignate another insurance company andrecommend that such insurance company
accept consultations on the transfer, etc. of
insurance contracts in the event of abankruptcy of an insurance company.
4. Procedures allowing the Life Insurance
Policyholders Protection Corporation of Japanto provide ﬁnancial assistance for the transfer,etc. of insurance contracts or underwrites
insurance contracts for an insurance company
in the event of a bankruptcy of such insurancecompany.

supervising such regulations.
The scope of business that subsidiaries of insurancecompanies may engage is restricted and is stipulated bylaw. Provided, however, that an insurance holding
company’s subsidiary may, with the approval of the FSA,
engage in any business that is not prescribed by law.
The arm’s length rule applies to inter-group transactionsof an insurance company.
Supervision of the FSA for an insurance company groupis based on laws and regulations as well as the
Guidelines and the Financial Conglomerate Supervision
Guidelines.

15. Do senior managers have to meet ﬁt
and proper requirements and/or beapproved?
Article 8-2 of the Insurance Business Act requires
directors who are engaged in the business of running an
insurance company to have the knowledge andexperience to appropriately, fairly, and eﬃciently
manage such business and to have adequate social trust(“Fit and Proper Principle”). These matters are dealt in
more detail in the Guidelines.

16. To what extent might senior managers
be held personally liable for regulatory
breaches in your jurisdiction?
There are certain criminal penalties for breaches ofregulations. Besides, the Prime Minister may, if an
Insurance Company has come to fall under any of thefollowing items, order the dismissal of its director,
executive oﬃcer, accounting advisor, company auditor
or ﬁnancial auditor:
i. if it is in violation of laws and regulations,disposition of the Prime Minister pursuant tolaws and regulations, or particularly importantparticulars among those prescribed in the
documents listed in the items of Article 4,paragraph (2) of the Insurance Business Act;ii. if it is in violation of the conditions attached to
the relevant license; andiii. if it engages in conduct prejudicial to the
public interest.

14. How are groups supervised if at all?
An Insurance Holding Company and an insurancecompany’s major shareholders (i.e., shareholders
holding 20% or more of the insurance company’s voting
rights) are required to obtain approval from, and thelarge holders of the insurance voting rights (i.e., holders
holding 5% or more of the insurance company’s voting
rights) are required to make notiﬁcation to, the FSAPDF Generated: 8-05-2023

17. Are there minimum presence
requirements in order to undertake
insurance activities in your jurisdiction

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Insurance & Reinsurance: Japan(and obtain and maintain relevant licenses
and authorisations)?
Overseas insurers may conduct insurance business inJapan only if they have opened a branch in Japan andobtained the applicable license from the FSA. The
procedure to apply for the license is mostly the same asthat for Japanese insurance companies. Since overseas
insurers do not have capital inside Japan, they are
required to deposit a minimum of JPY200 million to thedeposit oﬃce to protect policyholders.

18. Are there restrictions on outsourcing
services, third party risk management
and/or operational resilience requirements
relating to the business?
In principle, outsourcing of insurance companies’
business is not restricted. However, the Guidelines
govern the management of outsourcees.
Moreover, when an insurance company receives
business outsourced by another insurance company, it isnecessary to obtain approval from the FSA (Article 98,
Paragraph 2 of the Insurance Business Act), and in thecase of a group company, a notiﬁcation must be
submitted.
Furthermore, it is generally accepted that the corebusiness of an insurance company, such as deciding
whether to pay insurance claims, cannot be outsourced
due to the licensing system of the insurance business.
As for the operational resilience, the FSA has publishedthe draft of the discussion paper titled “Basic Principle
for Securing Operational Resilience” for public
consultation. The FSA will use this paper for the
discussion with insurance companies.

19. Are there restrictions on the types ofassets which insurers or reinsurers caninvest in or capital requirements which
may inﬂuence the type of investments
held?

20. Are there requirements or regulatory
expectations regarding the management of
an insurer's reinsurance risk, including any
restrictions on the level / type ofreinsurance utilised?
The Guidelines provide no quantitative criteria for the
management of an insurance company’s reinsurance
risks; rather, it calls for a supervision of a qualitative risk
assessment.

21. How are sales of insurance supervisedor controlled?
Solicitation of insurance is subject to a registration as
well as various regulations, such as the duty to provide
information and the duty to check the customer’s intent.
In addition, the Insurance Business Act has introduced
other measures, such as the Cooling-oﬀ System, or the
Financial ADR System.
Apart from those regulations, the Insurance Act – which
deals with insurance-related contract law (private law) –contains several mandatory provisions designed for theprotection of consumers, which insurers cannot removeby agreement.

22. To what extent is it possible to actively
market the sale of insurance into yourjurisdiction on a cross border basis and are
there speciﬁc or additional rules pertaining
to distance selling or online sales of
insurance?
Unlicensed overseas insurers may not conclude
insurance contracts with persons having an address orresidence in Japan, property located in Japan, or vessels
or aircrafts with Japanese nationality (Restriction on
Foreign Direct Insurance; Article 186-1 of the Insurance
Business Act) other than the insurance contracts listed
below:
reinsurance contracts;marine insurance contracts pertaining to
objects such as vessels with Japanesenationality used for international maritime
transportation;
aviation insurance contracts pertaining toaircrafts with Japanese nationality used forcommercial aviation;
insurance contracts pertaining to launching
into outer space;certain insurance contracts covering cargo

The asset management method of an insurer is limited
to the scope to the assets set forth in Article 97-2 of the
Insurance Business Act and Article 47 of the Ordinancefor Enforcement of the Insurance Business Act, including
such assets as securities, real property, loans, anddeposits.

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located within Japan which is in the process of
being shipped overseas; andoverseas travel insurance.
The restriction does not apply when an applicant who
wishes to purchase insurance from unlicensed overseas
insurers has obtained a permission from the FSA in
advance of their applications for insurance as set forth in
Article 186-2 of the Insurance Business Act. This
exception is provided for policyholders’ beneﬁt topurchase insurance products that are most beneﬁcial tothem. Provided, however, that such permission may not
be provided in the following cases:

Civil Code, the Commercial Code (Act No. 48 of 1899)
and any other laws and regulations, and that unilaterally
impairs the interests of the consumer in violation of thefundamental principle provided in the second paragraphof Article 1 of the Civil Code, is void”.

24. Is there a legal or regulatory resolution
regime applicable to insurers in yourjurisdiction?
One relevant regime, which exists under the
Insurance Business Act, is in charge ofmatters such as making changes to contract
terms, or issuing dispositions with respect tobusiness and property administration; anotherregime exists under the Bankruptcy Act and isin charge of corporate reorganization
procedures.
Still another body, called the Policyholders
Protection Corporation, plays an importantrole in the process of bankruptcy of insurancecompanies by providing ﬁnancial assistancefor transfers of insurance contracts and otherrelated matters pertaining to insurancecompanies undergoing bankruptcy,
management of the business of successor
insurance companies, underwriting of
insurance contracts, provision of ﬁnancial
assistance for the payment of covered
insurance proceeds, and purchase of
insurance claims.

the insurance product in question violates
laws or is unfair;
it is easy to conclude insurance contracts withlicensed Japanese or foreign insurers forcomparable insurance products on equal ormore advantageous conditions;the terms and conditions of the insurance
product in question are signiﬁcantly
unbalanced compared to the typical terms
and conditions of the same type of insurance
products with licensed Japanese or foreign
insurers;
concluding such insurance contracts would
unjustly deprive the insured and other related
persons of their beneﬁts; andconcluding such insurance contracts would
likely negatively impact the development of
the Japanese insurance business or beharmful to the public interest.

23. Are insurers in your jurisdiction subject
to additional requirements or duties inrespect of consumers? Are consumer
policies subject to restrictions, including
any pricing restrictions? If so brieﬂy
describe the range of protections oﬀered
to consumer policyholders
Consumer policies are restricted pursuant to several
laws. For example, mandatory or unilaterally mandatory
provisions in the Insurance Act (the latter is a series ofprovisions making void any agreement that, contrary tosuch provisions, adversely aﬀects policyholders); andinvalid provisions under the Consumer Contract Act.
For example, Article 10 of the Consumer Contract Act
provides that:“Any consumer contract clause that restricts the rights
or expands the duties of the consumer beyond theapplication of provisions unrelated to public order in the

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25. Are the courts adept at handlingcomplex commercial claims?
There are no special courts for resolving commercial
insurance disputes. Commercial insurance disputes are
generally resolved in district courts or summary courts
depending on the value of the dispute. In general,
Japanese courts are adept at handling commercial claims
even they are complex.

26. Is alternative dispute resolution wellestablished in your jurisdictions?
A ﬁnancial ADR system introduced in 2010 to encourage
fast, simple and ﬂexible dispute resolutions. ADR
institutions have been established with the designationand supervision of the FSA. Mediators in the ADR
institutions are selected from the professionals in theﬁnancial sectors. A ﬁnancial ADR system obligatesinsurance companies to cooperate the dispute
resolution, wherein insurance companies are required toappear at hearing and provide certain information

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Insurance & Reinsurance: Japan

requested by the mediators unless reasonable grounds.
As such, a ﬁnancial ADR system is advantageous tocustomers compared to lawsuits in the courts. The
number of ADRs handled through ﬁnancial ADR systems
remains stable in recent years.

27. Is there a statutory transfer
mechanism available for sales or transfersof books of (re)insurance? If so brieﬂy
describe the process
An insurance company may transfer insurance contracts
to other insurance companies by obtaining theauthorization of the Prime Minister pursuant to theInsurance Business Act. The mechanism of such transfer
is as follows:
Special resolution of shareholders meeting ofboth transferor company and transfereecompany in relation to such transfer.
A transferor company must make a publicannouncement within 2 weeks after the
resolution of the shareholders meeting as well
as notiﬁcations to each policyholders that will
be aﬀected by the transfer (the “Aﬀected
Policyholders”).
The Aﬀected Policyholders may raise an
objection within certain period. The transfer
must not be carried out where the number ofthe Aﬀected Policyholders who have statedtheir objections exceeds one tenth (one ﬁfth,
in case of transfer of insurance contracts
pertaining to all insurance contracts) of all
Aﬀected Policyholders, and the amountspeciﬁed by Cabinet Oﬃce Order as thecredits belonging to the insurance contracts of
the Aﬀected Policyholders who have thusstated their objections exceeds one tenth (oneﬁfth, in case of transfer of insurance contracts
pertaining to all insurance contracts) of theamount prescribed as the credits belonging to
all Aﬀected Policyholders.
In case where a transferor company obtains
an authorization of the Prime Minister, andwhere any Aﬀected Policyholder raised an
objection and manifested their intention tocancel the contract if the transfer of thecontract takes place, the transferor company
must refund to the relevant Aﬀected
Policyholder the amount of money reserved
for the insured, any unearned premium andany other amount of money speciﬁed by
Cabinet Oﬃce Order.

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28. What are the primary challenges to
new market entrants? Are regulators
supportive (or not) of new market
entrants?
Obtaining required license from the FSA is the primarychallenges to new market entrants. As it may take longtime to complete the license procedure, new market
entrants are better to commence the discussion with the
FSA 1.5-2 years before the launch of business.

29. To what extent is the market being
challenged by digital innovation?
In Japan, the emergence of digital innovation in theﬁnancial sector, so- called FinTech, was mostpronounced in the banking sector at ﬁrst.
Indeed, the Japanese government ﬁrst responded to
FinTech by amending the Banking Act so that banks
could own technology companies as their subsidiaries –something which was previously restricted to someextent (the “Amended Banking Act”).
Japanese insurance companies are gradually adopting
new technologies to their services, such as IoT (Internetof Things), Big Data and Artiﬁcial Intelligence. For
example, Sony Assurance’s automobile insurance, where
an insured has a “driving counter” installed into theircars, which would monitor their driving; if it shows safe
driving on the part of the insured, the insurer will givethe insured cash back towards insurance fees. This
technology was developed in collaboration with OPTEX
Co, a Japanese sensor producing company. As seen inthis example, insurance companies alone cannot create
new insurtech products because they do not have any
resources/knowledge to develop new technology, so an
alliance with tech companies or telecom companies istherefore necessary.
The remaining question is whether insurance companies
are allowed to own tech companies or telecom
companies as their subsidiaries in order to take fullcontrol of the new technologies. Technology
development and telecoms are not included in the list
contained in the Insurance Business Act regarding thescope of business in which a subsidiary of insurancecompanies may engage. As stated above, the Amended
Banking Act allows banks to own subsidiaries thatprovide IT and other technology to enhance banking
activities and beneﬁt the banks’ customers. However,the Insurance Business Act was not amended to
introduce similar modiﬁcation of allowable activities.
Therefore, it is questionable whether insurancecompanies may own tech companies or telecom

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companies under the current regulatory system.

30. How is the digitization of insurance
sales and/or claims handling treated inyour jurisdiction, for example is theregulator in support (are there concessions
to rules being made) or are there
additional requirements that need to bemet?
The Financial Services Agency has indicated its position
to continue promoting digitization as a sound andsustainable business model for insurance companies
based on the experience with the Covid-19 pandemic.
Speciﬁcally, the following deregulatory measures havebeen implemented with regard to the provision of
information by insurance companies to customers at thetime of sales of insurance products (eﬀective January 21,2021):
1. Explanatory documents related to “variableinsurance” and “foreign currencydenominated insurance” that were notpermitted to be issued by electromagnetic
means can now be provided by electronicmeans after obtaining the customers’
consent.
2. With regard to the obligation to deliver
documents to customers other than the
documents referred to above in item (i), while
the provision of information by electronicmeans had been permitted after obtaining
prior customers’ approval, the method oftransmission was limited to e-mail,downloading, and CD-ROM only. However,with the implementation of this deregulatory
measure, electronic means now include poston customer-only pages (e.g., pages requiring
IDs and password-based authentication) andpublicly-accessible pages (e.g., the company’s
home page).

applicable to insurers’ use of data in relation toindividual customers. Under the PIPA, customer data canbe utilized within the purpose of use that an insurancecompany notiﬁes upon its acquisition.

32. To what extent are there additional
restrictions or requirements on sharing
customer data overseas/on a cross-borderbasis?
Article 23 of the Personal Information Protection Act(“PIPA”) provides that transfer of personal data to a third
party requires the person’s advance consent. Exceptions
for this requirement include (i) opt-out scheme, (ii)outsourcing personal data management within the
purpose of use of the data, (iii) transfer of business; and(iv) joint-use scheme.
However, such exceptions are not applicable to overseas
transfers of personal data and, hence, the person’s
consent will be required for it unless the country where
the transferee of the data exists has the same level of
personal data protection regime as Japan or thetransferee has suﬃcient internal system for personal
data protection. In obtaining such consent, certain
information is required to be provided, including theinformation on the personal data protection system of
the foreign country, and on the actions the transferee
takes for the protection of personal data.

33. To what extent are insurers subject to
ESG regulation or oversight? Are there
regulations/requirements, including inconnection with managing climate change
and climate change related ﬁnancial risks
speciﬁc to insurers? If so, brieﬂy describe
the range of measures imposed.
There are no such regulations in Japan.

31. To what extent is insurers' use ofcustomer data subject to rules orregulation?

34. Is there a legal or regulatory
framework in respect of diversity andinclusion to which (re)insurers in yourjurisdiction are subject?

The Insurance Business Act requires an insurancecompanies to establish an internal management systemfor proper handling of customer data, including
preparation of company rules, training for
employees/oﬃcers, controlling access to customer data.
In addition, the Personal Information Protection Act(“PIPA”) provides a personal data mechanism, which is

The Corporate Governance Code to which the listed
insurance companies should refer includes the diversity
related principle. In particular, the principle 2.4“Ensuring Diversity, Including Active Participation of
Women” provides that “Companies should recognizethat the existence of diverse perspectives and values
reﬂecting a variety of experiences, skills and

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Insurance & Reinsurance: Japanof Japan issued the Cybersecurity Management Guideline
in 2015, which clariﬁes that cybersecurity is a businesschallenge and that managements of Japanese companies
have to take appropriate actions to protect theircompanies. Since then, to respond to such situations,insurance companies have developed insurance
products to cover the costs of information leakage ordamages caused by a cyberattack. Cyber insurance
policies that include cover for ransomware is now
becoming a “must-have” for any business.

characteristics is a strength that supports theirsustainable growth. As such, companies should promote
diversity of personnel, including the active participationof women.”
In addition, the FSA recently amended the disclosure
requirements for the listed companies regarding
sustainability which is applicable to annual securities
reports from ﬁnancial years ending on or after March 31,
2023. The amended rule now requires the listedcompanies to disclose their gender-related matters, suchas the “ratio of female managers”, the “ratio of male
employees taking childcare leave”, and the “genderwage gap”.

Increased longevity may aﬀect the strategy of insurancecompanies. Recently, the Institute of Actuaries of Japan
published the Standard Longevity Table 2018 (previously
amended in 2007), indicating signiﬁcant decreases inprojected death rates. With this trend of further
increasing people’s longevity, it is reported that
insurance companies will lower the fees for life insurance
by 5% to 10% for newly entered insurance contracts. It isalso reported that demands are gradually shifting fromlife insurance to products covering living costs when theinsureds become unable to work, reﬂecting theincreased longevity.

35. Over the next ﬁve years what type ofbusiness do you see taking a market lead?
Cyberattacks have come to pose a severe and present
risk that Japanese companies have to cope with, as they
are capable of rendering any countermeasuresineﬀective. The Ministry of Economy, Trade and Industry

Contributors
Hironori Nishikino
Partnernishikino_h@clo.gr.jp

Koji Kanazawa
Partnerkanazawa_k@clo.gr.jp

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