Japan: Financial Sector Assessment Program-Detailed Assessment of Observance on Insurance Core Principles

IMF Staff Country Reports, May 13, 2024

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Canonical URL: Japan: Financial Sector Assessment Program-Detailed Assessment of Observance on Insurance Core Principles

Publication date: May 13, 2024
This paper presents a Detailed Assessment of Observance of Insurance Core Principles for the Japan Financial Sector Assessment Program.
The Financial Services Agency (FSA) is the integrated regulator of financial services, including insurance, while accepting the insurance activities of cooperatives.
Areas of observance covered include licensing requirements, cooperation with other supervisors, and anti-money laundering and combating the financing of terrorism (AML/CFT).

Regulatory material contains extensive requirements for licensing of insurers.
The FSA works closely with applicants to assess whether they meet requirements, even if final decisions on licensing are taken by a minister.
The assessment identified significant gaps in the current framework of regulation and supervision.
The assessment found that, partly because of resource constraints, the FSA’s approach to insurance supervision is largely reactive.
The resolution framework and process of resolution for insurers needs to be carefully reviewed.
There is a need to strengthen institutional arrangements for insurance supervision.
As recommended in previous assessments, the FSA’s independence should be bolstered by the delegation of insurer licensing powers currently reserved to a minister.

Subjects: Anti-money laundering and combating the financing of terrorism (AML/CFT), Crime, Financial institutions, Financial sector policy and analysis, Financial stability assessment, Insurance, Insurance companies, International organization, Monetary policy, Solvency
Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), earthquake insurance take-up, Financial stability assessment, General insurance Association of Japan, General insurance rating Organization of Japan, Global, Insurance, Insurance companies, Japan FSAP, life insurer, Non-life insurance policyholder protection corporation, Solvency