Japan's Advisory Working Group Starts Review of Reinsurance Captive Rules
Japan's Financial System Council set up a Working Group on Insurance Systems after a ministerial consultation in August. Its first meeting was held on October 1 (Reiwa 8), chaired by Professor Suzaki of Doshisha University. The group will examine creating a reinsurance captive system and the future of the life insurance safety-net scheme. Officials said that rising natural disaster losses are making it harder for companies to transfer risk through ordinary insurance.
What does it mean?
Japan does not have special rules for captive insurers, which are companies set up to insure their own group's risks. A company that wants a reinsurance captive currently needs a full insurance license, which is costly, so many Japanese firms set theirs up in Hawaii instead. A new government working group will study whether Japan should create its own rules and also review the life insurance safety net.
Who is affected?
Large Japanese companies that manage their own risks and may use captives, and life insurance policyholders, since the safety-net question is part of the review.
What changes?
Until now, Japan has had no captive-specific system, and reinsurance captives require an insurance license. The working group has only just begun, so no rule change has been made yet.