New requirements will prioritise customer needs over insurer relationships, potentially raising operating costs for multi-insurer agencies.
Japan’s new insurance sales rules will require multi-insurer agencies to justify product recommendations based on customer needs rather than commercial relationships, potentially increasing operating costs and squeezing margins.
Effective 1 March 2028, agencies must strengthen product comparisons and explain why recommended policies suit individual customers. The changes follow misconduct involving motor insurance dealerships and concerns that advertising payments influenced life insurance recommendations.
Rachit Madan, Financial Services Research Lead at Mordor Intelligence, said the reforms change how agencies determine which products to offer.
“The shift is from relying on established insurer relationships, to demonstrating that recommendations are based on customer needs,” Madan said.
For motor insurance, agencies must consider coverage and premiums rather than allow dealership relationships to dictate product selection.
Life and medical insurance recommendations must reflect customers’ protection needs, budgets, and long-term financial priorities.
Madan said the cheapest policy would not necessarily be the most suitable, with coverage exclusions, claims services, and individual circumstances also influencing decisions. The changes could increase training and system costs, particularly for agencies representing multiple insurers.
Large dealerships must manage conflicts between automotive sales and insurance distribution, whilst life insurance agencies and financial planners will need stronger processes to substantiate their advice.
“I would say it could put pressure on the margins, but I would not conclude that the multi-insurer model itself is under the threat,” Madan said.
Separately, Japan reduced the minimum security deposit for independent insurance brokers from ¥20m to ¥10m in June 2026, lowering barriers to entry.
Madan said larger agencies could spread additional costs across their operations whilst retaining the advantage of offering customers products from multiple insurers.