Japanese-owned captive insurers remain a small fraction of the total number of captives globally, primarily due to the close relationship between the country's insurance companies and industrial groups, according to a new report from A.M. Best.
The report, entitled Ties Between Insurers: Industrial Giants Limit Scope of Japan's Captive Market, stated that the comparatively low number of captives in Japan can also be attributed to the country's small liability insurance market, relative to the Western market.
The Japanese government covers workers' compensation risks, while that line of business in the US is fully employer-funded through either commercial insurance or self-funded insurance.
Prospects for growth of the Japanese captive market are mixed.
“A strong near-term increase in the number of new Japanese captives is not likely," said Seewon Oh, senior financial analyst at A.M. Best Asia-Pacific.
But Oh did claim that the role of captives in Japanese companies is expected to develop gradually, based on recent observations of both rated and not-rated captives owned by Japanese companies as well as discussions with market participants such as multinational brokers.
