JAPAN Trends and Developments Contributed by: Kazuo Yoshida and Tomonori Ogawa, Mori Hamada
claims payment management department and the sales department of insurance companies. Overview of the amendments to the JFSA’s Supervisory Guidelines • Promoting the use of insurance brokers: see details in the sections “Revisions relating to insurance bro- kers” and “Expected revisions relating to insurance brokers” below. • Preventing excessive favours from insurance com- panies to insurance agents: the JFSA’s Guidelines recognise that excessive preferential treatment pro- vided by insurance companies to insurance agents may induce those agents to recommend specific insurance products based on the level of preferen- tial treatment received, thereby potentially hinder- ing customers’ opportunities to make appropriate product selections. Thus, the Guidelines endorse the establishment of systems and judgement crite- ria relating to excessive favours. • Preventing inappropriate secondment from insur- ance companies to insurance agents: the Guide- lines advocate for the prevention of the inappropri- ate secondment of insurance companies personnel to insurance agents, by putting in place suitable secondment systems and judgement criteria, in light of the following risks: (a) secondments functioning as excessive favours, which may induce preferential treatment of the seconding insurance company’s insurance products and limit customers’ opportunities to make appropriate product choices; (b) improper sharing of customer information; (c) interfering with the independence of insurance agents; and (d) conflict-of-interest management. • Optimisation of agency commission calculation methods: the JFSA requests corrective action regarding the calculation of agency commissions for non-life insurers, noting that in recent cases of fraudulent insurance claims, the emphasis on scale and revenue growth has led to a tendency to not always adequately and sufficiently evaluate the quality of operations of customer-centric business practices ‒ including compliance ‒ related to insur- ance solicitation. • Establishment of information management systems for customer information: in response to informa-
tion leakage incidents, the need-to-know princi- ple has been introduced. This requires access to customer information be restricted to employees and officers who require it for business purposes. Furthermore, there must be systems to ensure the appropriate management of customer information, including timely and appropriate verification involv- ing the compliance department. • Reduction of policy-held shares: the JFSA con- cluded that the practice of policy-held shares of insurance agents by insurance companies signifi- cantly impacted market share and impeded fair competition. As a result of this finding, the JFSA requires a reduction in policy-held shares. Revisions relating to insurance brokers Method for receiving brokerage fees For the purpose of creating a sound competitive envi- ronment in the Japanese insurance market, the JFSA is promoting the use of insurance brokers. Under the previous Supervisory Guidelines for Insurers of the JFSA, insurance brokers were not allowed to charge brokerage fees to customers; instead, they were required to receive such fees from insurance compa- nies. The revised Guidelines allow insurance brokers to charge customers for a portion or all of the broker- age fees in the commercial lines insurance market, and require insurance brokers to explain to customers in advance whether (i) they will receive a full commis- sion from the insurance company, (ii) a full commission from the customer, or (iii) a portion of the commission from both the customer and the insurance company. This amendment has been in effect since 28 August 2025. Expected revisions relating to insurance brokers In addition, the JFSA announced draft amendments to laws and regulations concerning the following mat- ters on 17 December 2025. These amendments are expected to take effect in June 2026 or later; however, their content may change following the public com- ment procedure. • Revision of security deposit: insurance brokers must make a minimum deposit of JPY20 million at the “deposit office” nearest to their principal office. Although the security deposit is meant to ensure that insurance brokers have the financial resources
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