Japan’s Financial Services Agency has now said, in plain supervisory language, that its revised guidance for small short-term insurers will not simply copy the bigger-insurer rulebook line for line. The agency said the revision was built on changes tied to the May 30, 2025 amendment of the Insurance Business Act, and that it sets out the supervisory “watch points” and practical cautions for small short-term insurers in light of those changes.
The main operational point is a familiar one with sharper edges: if a small short-term insurer or its sales agent offers services, goods, or other transactions in connection with signing or soliciting an insurance contract, the arrangement needs to stay outside the boundary of prohibited “special benefit” provision. The revised text says regulators will look at whether the deal is socially reasonable, whether it is unnecessary or excessive for the insurer’s business, whether the price or other terms are wildly off compared with ordinary transactions, and whether it distorts fairness among policyholders.
One comment in the consultation asked whether the revised guidance would apply the same rules and interpretations as the guidance for larger insurers, under an equal-footing approach. The FSA’s answer was more nuanced, and more useful: the revision was drafted in light of the parallel changes to the larger-insurer guidance, but the small-short-term version can differ where the sector’s business characteristics require it.
That matters because small short-term insurers often rely on simpler products and tighter distribution models, where even small-value perks can become a compliance headache if they start looking like a sales incentive in disguise. The new wording does not ban ordinary commercial transactions, but it does make clear that “ordinary” will be judged with a regulator’s eyebrows firmly raised.