Japanese life insurers are increasingly utilizing Bermuda-based reinsurance structures as they respond to evolving regulatory requirements and market conditions.
Industry executives discussed the development at the Bermuda International Long-Term Insurers and Reinsurers (BILTIR) Life and Annuity Conference.
Kazuyuki Hayashibara, director of Dai-Ichi Re, said on a panel that “Japan's capital framework introduction has helped clarify” insurance needs, making it easier for insurers to understand market requirements.
In a report from the Royal Gazette, he noted that while the new framework provides clarity, Japan’s personal information protection laws can present challenges, particularly when property owners must share personal data with insurance companies under certain contract terms.
Hayashibara also pointed out that the regulatory environment requires “clear explanations and proper consent from elderly persons during insurance contract processes.”
These developments are part of a broader trend as Japanese insurers adapt to new capital frameworks based on International Capital Standards, while also facing persistent low interest rates and an aging population. A recent AM Best report documented an “uptick in Japanese insurers ceding business directly to Bermudian reinsurers or through existing Bermudian-based affiliates.”
In response to the growing use of Bermuda-based reinsurance, Japan’s Financial Services Agency is reviewing life insurers’ reinsurance deals with Bermuda-based entities. The agency is assessing the scale and types of cross-border transactions and examining the exposure to Bermuda reinsurers, as Japanese insurers seek capital efficiency and risk management solutions amid a mature domestic market.
Bermuda now represents about 35% of the world’s reinsurance capacity, according to industry data. Member companies of the Association of Bermuda Insurers and Reinsurers reported a collective gross written premium of over US$171 billion in 2023, an 18% increase from the previous year.
Bermuda’s influence in global reinsurance is linked to its ability to absorb both primary and secondary perils, and the island’s market has played a critical role in covering losses from major natural disasters.
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