Host Rob Chaplin is joined by colleague Annabel Smethurst to guide “The Standard Formula” listeners through the prudential solvency regime in Japan, the fourth-largest insurance market in the world. They explore why Japan is attractive to reinsurers, its regulatory evolution and the increased openness to foreign participation due to regulatory changes.
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In the third episode of Skadden's yearlong podcast series on global prudential solvency requirements, host See more +
Host Rob Chaplin is joined by colleague Annabel Smethurst to guide “The Standard Formula” listeners through the prudential solvency regime in Japan, the fourth-largest insurance market in the world. They explore why Japan is attractive to reinsurers, its regulatory evolution and the increased openness to foreign participation due to regulatory changes.
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In the third episode of Skadden's yearlong podcast series on global prudential solvency requirements, host Robert Chaplin and colleague Annabel Smethurst discuss Japan's insurance and regulatory landscape. As the world's fourth-largest insurance market, Japan has become increasingly attractive to foreign insurers due to its mature market, aging population and ongoing regulatory reforms. Rob and Annabel explore Japan's regulatory framework, its evolution from the "financial Big Bang" of the 1990s and the flourishing reinsurance sector that has emerged as the country aligns with international standards such as Solvency II and the Insurance Capital Standard (ICS).
Top takeaways from this episode
Japan's Insurance Market: Japan holds 5% of the global insurance market, with premiums of $363 billion in 2024, making it the fourth-largest insurance market in the world after the U.S., China and the U.K. The country has seen increasing competition with the rise of foreign insurers and new entrants in the reinsurance market.
Regulatory Framework: Japan's regulator, the Financial Services Agency (FSA), has more closely aligned the country’s standards with global frameworks such as Solvency II and the IAIS ICS. Foreign insurers must establish a local subsidiary or branch and obtain an FSA license to operate in Japan, with reinsurance being a notable exception.
Reinsurance Boom: The past 18 months have featured a high volume of reinsurance transactions, particularly between Japanese life insurers and offshore reinsurers (often Bermuda-based). These transactions are driven by an aging population, as well as the capital- and asset-intensive nature of savings-oriented products.
Economic Value-Based Solvency: Japan is implementing new economic value-based solvency regulations from the fiscal year ending March 2026 that are generally aligned with the ICS but with adjustments tailored to Japanese insurers, which could further transform the regulatory landscape.
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