The new Japanese Insurance Act (the Insurance Act), which was passed by the Japanese Diet in May 2008 came into force on 1 April 2010. The Insurance Act will regulate insurance contracts generally (although the Commercial Code will continue to regulate marine insurance). The Insurance Act represents the first significant revision of insurance law in Japan for about 100 years. The stated key objectives of the Insurance Act are to adapt the rules of insurance contracts to the needs of modern society and to revise the law to enhance the protection of policyholders.
In response to recent claims payment delinquency problems and in an effort to protect policyholders, the Insurance Act will invalidate certain provisions adverse to policyholders, limit the duty of disclosure and establish requirements on the timing of payments. Consequently, insurance companies have had to undertake various initiatives to conform to the Insurance Act, such as revising their insurance policies, restructuring systems for the payment of insurance claims and revising their claims payment documentation.
As insurance policies issued in Japan are subject to approval by the Financial Services Agency, any proposed changes to the general terms must first be approved by the Financial Services Agency.