Japan's reinsurance deficit on pace to match record as offshore payments surge
Kenneth Araullo Reinsurance News
Fee payments by Japanese insurers to overseas reinsurers are rising, driven in part by the need to manage risks associated with high-yield policies.
The insurance and pension services component of Japan's Finance Ministry balance of payments data showed a ¥2.75 trillion (US$17.5 billion) deficit for January to October 2025, as per a report from Nikkei Asia.
The figure puts 2025 on pace to match the record ¥3.26 trillion deficit recorded in 2024. That deficit was roughly nine times the size of the corresponding figure from a decade earlier.
The Finance Ministry does not provide a further breakdown of the payments data. However, the Cabinet Office indicated that the bulk of the insurance and pension services component is believed to consist of reinsurance fees.
The growth has been linked to the proliferation of high-yield life insurance products in Japan, including foreign-currency-denominated policies. Protecting against investment risk on these products requires holding more capital, making reinsurance a more capital-efficient option for insurers.
Currency movements remain a key concern for Japanese corporates. Aon's 2025 Global Risk Management Survey found that exchange rate fluctuation ranked among the top business risks for Japanese respondents, alongside cyber exposure and supply chain vulnerabilities.
The survey also indicated that 74.7% of Japanese companies have a dedicated risk management and insurance department, compared with 68.4% globally. Japanese respondents expect currency and climate-related themes to remain significant through 2028.
Japanese life insurers' reinsurance payments totaled ¥10.9 trillion in fiscal 2024, according to the Life Insurance Association of Japan. That figure is roughly three times the level recorded five years earlier.
Japan's Financial Services Agency released a report in July that highlighted counterparty risk to Japanese life insurers. Reinsurance is often placed with entities in Bermuda, making it more difficult for regulators in Tokyo to assess the scope of these transactions.
Reinsurance contributes to Japan's broader balance of payments deficit in services. The nation's digital deficit reached ¥6.8 trillion in 2024 and totaled ¥5.6 trillion for January to October 2025.
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