Insurers Tell Study Group: 'A Second Straight Year Would Force a Review' of Reinsurance Ripple Effects

The Consumer Affairs Agency's expert study group heard on the 15th from working-level representatives of Sonaeya Non-Life Insurance and two other major insurers, on the question of how far the Britan Reinsurance Union's previously reported rate increase might ripple into domestic forecast-linked insurance, as earlier flagged on the 8th. The insurers reconfirmed their announcement of the 5th that household premiums would hold steady next fiscal year, with a Sonaeya representative explaining, "This round's increase is being absorbed by drawing down reserves at each company, so there is no direct burden on household policyholders."

A representative from another insurer, however, said, "There's a limit to how much reserves can absorb. If a similar increase continues next fiscal year, we'll have no choice but to consider revising household rates" — publicly confirming, for the first time in this forum, the industry view previously reported on the 8th. Group chair Ritsuko Fukazawa commented, "Today's hearing made the structure by which swings in the international reinsurance market feed through to domestic consumer rates considerably more concrete. We need to keep track of just how far the reserve 'cushion' can hold."

As previously reported, facility insurance — on a separate track from household coverage — already faces a projected increase following BRU's hike. An industry association representative at the hearing explained, "Facility coverage has far fewer policyholders, so it reflects reinsurance-market conditions more directly. It differs institutionally from household coverage." The group decided to prepare, by its next meeting, materials explaining the difference between the two systems in consumer-friendly terms.

A securities analyst told this paper that the hearing's content was largely as expected, with no notable reaction in observation-related stocks or TDI futures. The analyst also noted the same-day announcement of the Window Treaty's interim agreement (previously reported): "It was a day with both relief over the diversion ban being settled and a small unease over where reinsurance rates are headed. Neither pushed the market to an extreme reaction, but how the market reads the two together still needs watching."

One consumer-group representative who sits on the panel requested, "I can follow the explanation about absorbing this through reserves, but from an ordinary policyholder's perspective, it's never visible day to day what judgment call is being made behind the fact that premiums aren't changing. I'd like today's kind of explanation put out in a form ordinary policyholders can understand too, not left inside this panel." The secretariat said it would prepare a draft explanatory document, covering the difference between household and facility coverage, by the next meeting.

Fukazawa said after the meeting that the challenge for the next session would be organizing the original three agenda points — advance disclosure, clear reference to the underlying forecast, and whether a surcharge cap is needed — together with the reinsurance ripple effect that took concrete shape today, into a set of recommendations. The next meeting is scheduled for November.