The Financial Services Agency (FSA) secretariat has asked its new insurance working group to back a tailored licence for reinsurance captives, insurers that cover only their own corporate group. The proposal assumes no tax measures beyond those that apply to ordinary non-life insurers, and it would leave captives that write direct policies to later study. The group's first meeting is set for 1 October 2026, under a consultation to the Financial System Council dated 31 August that asks for a reinsurance captive regime and a review of the life insurance safety net.
What the secretariat proposes
Japan has no captive-specific regime. A group that wants to run a reinsurance captive at home needs an insurer's licence, which the secretariat calls too heavy for this kind of business. Many groups have set up subsidiaries abroad instead, including in Hawaii.
The draft direction treats a reinsurance captive as a type of non-life insurer but lets the FSA tune the rules. It would adjust licensing criteria and minimum capital, which stands at ¥1bn for an ordinary non-life insurer. It would also define the group companies a captive may cover and set the insurance lines it may reinsure, ease restrictions on officers, apply a simpler capital rule, and narrow the permitted business and subsidiary scope more than for ordinary insurers. The paper gives no new capital figure.
The secretariat's comparison table shows the range. Hawaii's Class 1 pure captive needs at least $100,000, Singapore S$400,000 and Ireland €1.3mn, according to the FSA's own comparison. The Japan Growth Strategy, approved by cabinet on 21 July 2026, calls for studying a system for insurers that take only their own group's risk. A financial strategy issued by the Cabinet Secretariat the same day says work is under way toward submitting a bill to the next ordinary Diet session.
Tax and primary captives
The secretariat points to the UK, where the Prudential Regulation Authority and the Financial Conduct Authority published draft captive rules on 14 July 2026. Consultation runs to 14 October, with implementation planned for mid-2027, and HM Treasury has said tax incentives are not a necessary component.
On captives that write policies directly to their parent group, the paper says no Japanese group is known to have set one up, and that a captive reinsuring abroad would effectively allow direct overseas insurance, which the Insurance Business Act generally bans. It proposes studying whether such a regime is needed at all.
Industry and member views
Mitsubishi Heavy Industries told the group it set up a Hawaii reinsurance captive in April 2026 after liability cover ran short. It asked for Japanese requirements on capital, full-time staff and disclosure to be no tougher than abroad for captives that retain only their own group's risk.
Foresight Risk Management counts 181 Japanese-group captives since 1974 and urges a regime that treats captives as special-purpose risk companies, not smaller versions of ordinary insurers. The secretariat notes there is no official count: one text puts the figure near 100, another at 162 in December 2022.
A Keio University professor who sits on the working group backed putting reinsurance captives first and skipping tax perks. The professor would leave employee life and medical cover out for now and wants a dated review of primary captives.