Simon Wallington, Managing Director at the GrECo nova partner Cornes in Japan discusses with Jonathan Höh, GrECo nova Network Coordinator the rise of foreign investment, regulatory issues of insurance and the importance of “hanko” in Japan.
HÖH: What role does foreign direct investment play in the Japanese economy?
WALLINGTON: By way of background, Japan has had less foreign investment when compared with most of the other major developed nations. This is mainly because for a long time, they have sought to nurture and protect their own companies until they were strong enough to trade and compete in the global markets. In some cases, foreign companies have entered the market and then withdrawn once they found the barriers too difficult to manage. For example, eBay Inc who entered the Japanese market in 1999 but had to withdraw in 2002 due to local competition. Fortunately, the situation has recently changed and foreign investment in certain industries is now rapidly increasing.
Japan is potentially a very attractive market for many overseas companies because it has a very large and sophisticated customer base of over 120 million and represents approximately 10% of the world’s economy. However, it is a tough market to break into because Japanese customers can be very demanding, with different tastes and needs requiring overseas companies to redesign or redevelop their products. Examples of this in the past have included cars, mobile phones and toothbrushes.
HÖH: What are the biggest risks that foreign companies operating in Japan need to be aware of?
WALLINGTON: The size of the market requires substantial investment and there is usually fierce competition from long established competitors (depending on the products and industry). A detailed market research and strategy is an absolute necessity to succeed in this country.
In addition, Japan has always been a very bureaucratic country with lots of regulations, permissions, certifications, procedures, offices and authorities requiring approval procedures. These don’t normally exist to such an extent in most developed countries and it requires a lot of patience to navigate through these.
On the physical risk side, Japan is reported to have around 5,000 minor earthquakes recorded per year (more than half measure between 3.0 and 3.9) and around 160 earthquakes with a magnitude of 5 or higher. Having said that, the building construction regulations are such that most of the infrastructure can withstand all but very strong earthquakes. Other natural perils such as flood, typhoons and windstorms are becoming more regular and stronger as climate changes make their presence felt.
HÖH: What are the main facts of the insurance market in Japan? How do the key indicators compare to European markets like the German insurance market?
WALLINGTON: The Gross Written Premiums of 114,818 million USD in Japan are rather low compared to 126,005 million USD in Germany. This clearly indicates that the Japanese insurance buyers do not purchase as much insurance as these other countries, in particular business interruption insurance.
The major lines of insurance include Motor (40.2%), Liability (19.6%), Property/Commercial (18.4%), Marine (4.7%) and Other (17.1%).
Additionally, the market share of the top big 3 Japanese insurers represents 86% of the Japanese premium, indicate a strong concentration and power base in these 3 insurers.
The largest Claims in FY 2018-2019 were natural disasters including eight typhoons totalling 29.3 billion USD/ snowfall 3 billion USD / heavy rain 1.8 billion USD although this is somewhat less than major earthquakes such as the Tohoku earthquake in 2011 which resulted in 15,782 killed/4,086 still missing/128,530 dwellings destroyed & losses totalled 236 billion USD.
HÖH: Can international insurance programmes be implemented? Which special features must be considered?
WALLINGTON: There are literally thousands of International Programmes in place in Japan through fronting policies for foreign companies operating in Japan. As non-admitted insurances in Japan are illegal (apart from marine, aviation, reinsurance and overseas travel), companies must have their global insurers/brokers arrange for fronting policies to be issued by either their licensed subsidiary in Japan and if they have none, then by a correspondent licensed insurer/broker.
Additionally, when purchasing insurance in Japan it should be noted that the Insurance Policy Wordings need to be first approved by Japanese FSA. In addition, the collection of insurance premiums is critical as Japan is a “cash before cover” jurisdiction and the fronting policies are only effective once the premium is paid to the insurance agency such as Cornes. Insurance premiums need to be paid by a policyholder who resides in Japan in Japanese yen and not from overseas parent companies.
Policy wordings are available in Japanese or English depending on the type of insurance and the insurer. The compliance laws in Japan require insurance agents to explain each type of insurance and get the local subsidiary’s ‘sign off’ that they understand and agree to the renewal terms even when the terms are agreed by their head office.
HÖH: What are the first steps for foreign clients regarding insurance?
WALLINGTON: Once, we at Cornes, are advised of a new client and the fronting policy(ies), we introduce ourselves to the local subsidiary’s contact and the fronting insurer(s). We then re-confirm the terms, run through the insurances with the local client representative (as required under Japanese law), raise an invoice and issue the application forms (one required for each policy every year). Japan is a “cash before cover” jurisdiction so cover commences only once we, acting as the insurer’s agent, receive the premium. Every application form requires the client’s registered “hanko” (stamp) and insurers will only accept the originals of these forms before issuing the policy documents although the pandemic and WHF restrictions has meant that some insurers accept copies for the time being.
Cornes Insurance Agency prides itself on its professionalism and we have established a comprehensive servicing and follow-up system in place to ensure we give every client a friendly and professional service. Our incoming business service capabilities are our lifeblood and we insist that all account managers have a minimum level of English. In addition, we currently have two persons who can also speak and write Spanish and one who can write and speak German.
Our insurance license enables us to not only manage the client’s general and financial risk insurances but also assist them with their Employee Benefit insurance needs – two of our account managers used to work for Japanese Life Insurance companies. All account managers are required to pass the Japanese Insurance Agency exams before being allowed manage clients. In terms of our international business experience, we have an average of 10 years per account manager.
Simon Wallington
Simon holds the title of ACII from Chartered Insurance Institute as well as the NIBA diploma that allows him to practice as an insurance broker in Japan. He worked in 3 different countries starting in London as a trainee in 1977 before becoming account manager and then moving to Tokyo in 1985 where he was branch manager at Sedgwick. After just over 5 years in Tokyo he transferred to Sydney where he managed a portfolio of corporate clients. Afterwards Simon joined JLT as Director of Asian Business Development. His role soon extended to include local Australian and European clients, such as major Japanese and Korean corporate conglomerates. Since 2010, after working for InterRISK in Sydney for 5 years, he joined Cornes as Managing Director responsible for all aspects of the Insurance Division.
Email: simon.wallington@cornes.jp
Phone: +81 357 301650
Mobile: +81 804 2004459
About Cornes
The Cornes business was founded in Yokohama more than one-and-a-half centuries ago in 1861 by Frederick Cornes and his partner, William Aspinall. Initially trading in silk and tea, the business quickly expanded to include the import of cotton, metals, consumer goods, coal and other raw materials. The company was also a pioneer in the Japanese insurance market starting with its appointment in 1868 as the first Lloyd’s agent in Japan – a position that is still held today. With the development of its maritime and insurance operations, Cornes paved the way for new services-based industries in an age when business was still dominated by trade in material goods.
The 25 employees in the insurance division located in Tokyo and place over 26 million EUR premiums into local and international insurance markets. The insurance division of Cornes has specialised knowledge and expertise across several industries enabling clients to benefit from tailor made programmes that extend beyond the market’s standard insurance products. They look after over 700 clients with global programmes ranging from property & liability, cyber and D&O to Group Life Insurances working in conjunction with the global brokers and agents overseas.
Related Insights
Pillar of Our Strategy Is Specialisation – Interview With Georg Winter
Georg Winter offers some insights into his vision for GrECo. Interview was originally published in Lockton Global Partners Magazine.
‘Our only focus is on our client’s and people’s needs’
Ante Banovac shares his thoughts about future risks facing the insurance industry and the state of the insurance market in Serbia, Slovenia and Croatia
How bad was drought this year in your region and how much insurance would help to protect against losses?
Such a big drought leads to many negative consequences in many industries, especially in agriculture, energy, logistics, and forestry.

Jonathan Höh
Group Sales & Market Coordination
T +43 5 04 04 396