Index-Pricing Study Group Adds Britan Reinsurance Ripple to Its Agenda; Next Meeting Set for the 15th

The Consumer Affairs Agency's expert study group on index-linked pricing, which held its first meeting on September 17, announced on the 8th that it would formally add the previously reported decision by Sonaeya Non-Life Insurance and two other major insurers to hold next fiscal year's household premiums steady (announced on the 5th) — and the Britan Reinsurance Union rate increase behind it (an average 12 percent rise next fiscal year, previously reported) — to the agenda for its next meeting. "The insurers say they absorbed this round's cost through reserves, but they've also said a review becomes possible if the increase continues for two years or more," a secretariat official said. "As a matter of institutional design, how far swings in the international reinsurance market can ripple into domestic household rates has become a question we can't set aside."

Group chair Ritsuko Fukazawa commented, "On top of our original three points — advance disclosure, clear reference to the underlying forecast, and whether a cap on surcharges is needed — I want to ask the insurers to submit materials on just how far swings in the international reinsurance market actually feed through to domestic rates." The next meeting is scheduled for October 15, when working-level representatives from the insurers are expected to be heard.

As previously reported, even after BRU's October 3 announcement, no notable reaction has been observed in domestic observation-related stocks or TDI futures. One insurance industry source told this paper, "Household and facility coverage run on separate tracks, so the market is staying calm for now" — adding, "but if this becomes a second straight year of increases, that changes the picture."