JAPAN Law and Practice Contributed by: Hironori Nishikino and Koji Kanazawa, Chuo Sogo LPC
6.3 Intermediary Involvement in an Insurance Contract While insurance agents act on behalf of insurance companies, insurance brokers act on behalf of cus- tomers independent from insurance companies (buy- er’s agents). 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract Insurance contracts may be concluded verbally but, in practice, they are committed to writing so that the contractual conditions are clearly documented on paper. The existence of insurable interest (economic interest that may be subject to loss by the occurrence of insured events) is required as a condition to effectu- ate a non-life insurance contract. The insured is the person to whom the insurable interest belongs. The reason for the existence of insurable interest is to prohibit gambling and prevent moral hazards. How- ever, to meet the convenience of everyday operations, this requirement for the existence of insurable interest tends to be applied with a fair amount of leniency and flexibility. 6.5 Multiple Insured or Potential Beneficiaries In non-life insurance, only the insureds may be the beneficiaries of an insurance contract. Insurance ben- efits are paid to the insureds and/or parties authorised by the insureds to receive the benefits. 6.6 Consumer Contracts or Reinsurance Contracts From the viewpoint of protecting policyholders, the aim of the Insurance Act has been, in large measure, to impose a duty on insurers to insert certain manda- tory provisions into insurance contracts (ie, manda- tory provisions that void agreements entered into in contravention of them, potentially adversely affecting policyholders). However, in view of the fact that uni- laterally imposed mandatory provisions are not appli- cable to the following types of non-life insurance: (i) maritime insurance contracts, (ii) aviation insurance contracts, (iii) nuclear energy insurance contracts, and (iv) non-life insurance contracts (including reinsurance contracts) covering damages arising from business activities conducted by a juridical person, other organ- isation or an individual who operates a business, it
Recently, “open-for-visitor” agencies have strength- ened their presence. Out of the insurance products of multiple insurance companies, these agencies make – on their own initiative – proposals for insurance prod- ucts that conform to customers’ actual needs, which open-for-visitor agencies call “consultative selling”. 6. Making an Insurance Contract 6.1 Obligations of the Insured and Insurer The Insurance Business Act imposes on a policyhold- er or the insured a duty to disclose material matters regarding risks if requested to be disclosed by the insurer (duty to answer the question). This duty is embodied in insurance policies in the form of a mandatory provision imposed unilaterally by the insurer (ie, a mandatory provision that voids agree- ments entered into in contravention of it, potentially adversely affecting policyholders); however, the provi- sion is not applicable to the following types of non-life insurance: • maritime insurance contracts; • aviation insurance contracts; • nuclear energy insurance contracts; and • non-life insurance contracts for the coverage of damages arising from business activities conduct- ed by a juridical person or some other organisation or an individual who operates a business. Therefore, for these exceptional contracts, it is pos- sible to stipulate special provisions. 6.2 Failure to Comply With Obligations of an Insurance Contract If a policyholder or the insured violates the aforemen- tioned duty, the insurance company may cancel the insurance contract and, except for damages not aris- ing from violation of the duty of disclosure, will be dis- charged from liability for making insurance payments. An insurance company’s right of cancellation will be extinguished one month after it learns of the violation that would otherwise give cause to cancellation or five years after the conclusion of the contract.
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