Business Insurance in Japan for European Companies: Requirements and Differences

Map of what travels and what stays home when a European company insures a Japanese subsidiary: EU-level rules, member-state compulsory insurance, the European program, and the Japanese local policy

A European group that insures its German, French and Dutch entities under one program, placed by a broker with an insurer authorised in one member state and passported into the others, naturally asks whether the same program can take in the new Japanese subsidiary. It cannot, and the reason is instructive: the rules that make a single European program possible are EU rules, and they stop at the border of the European Economic Area. The rules that decide what a company must insure, how its employees are protected after an accident and what its core liability policy looks like are member-state rules, and they stay at home. Japan has its own answers to each of those questions. This article sets out which parts of a European company's insurance thinking travel to Japan, which do not, and what replaces them.

It is written for the risk, finance and legal functions of companies headquartered in the EU and, with a separate note, in the United Kingdom. It uses Germany and France as worked examples because their statutory schemes are documented in primary sources, and it treats the UK separately because it is outside the EU. For the overall picture for any foreign company in Japan, see our guide to business insurance in Japan for foreign companies; for the legal position of a foreign policy in Japan, see non-admitted insurance in Japan; for program design, see global insurance programs in Japan. Facts were checked on 28 October 2026 against the sources listed at the end.

This article is a general explanation. It does not describe any particular insurer, product, policy or endorsement, it is not legal or tax advice in any jurisdiction, and the Japanese "counterparts" it names are generic lines whose terms differ by insurer. EU and member-state rules are summarised at a level sufficient to show the contrast with Japan; they are not a guide to European law.

SummaryKey points

EU law harmonises how insurers are supervised (Solvency II), lets an insurer authorised in one member state write risks across the EEA without further authorisation (passporting), makes motor third-party liability compulsory everywhere (Motor Insurance Directive) and frames intermediary regulation (IDD). It does not decide which business insurance is compulsory, how work injuries are compensated or what a liability policy looks like; those are national.
Passporting ends at the EEA border. An insurer with no branch in Japan may not, in principle, insure property located in Japan or persons resident in Japan (Insurance Business Act, Article 186); a third-country insurer in the EU needs branch authorisation (Solvency II, Article 162) just as a European insurer in Japan needs a Japanese licence.
Japan's work-injury scheme is public, like Germany's statutory accident insurance, and applies to any business employing a worker from the day it starts. Unlike some European schemes, it does not extinguish the employer's civil liability, so a voluntary employer's top-up is common.
Japan has no general mandate to buy commercial insurance and no counterpart to France's ten-year construction liability insurance or to the professional liability mandates of German lawyers and auditors; pressure to insure comes from leases, customers and the Product Liability Act, under which the importer is liable for defective goods.
Europeans who know natural perils as an add-on to property cover will recognise the Japanese structure: standard commercial fire insurance excludes earthquake, which is added with its own limit and deductible, and the government-backed earthquake scheme is residential only. Japan has no equivalent of France's state-backed catastrophe guarantee for businesses.

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What EU law harmonises and what it leaves to member states

Four EU instruments shape a European risk manager's expectations. Solvency II (Directive 2009/138/EC, as amended by Directive (EU) 2025/2 applying from 30 January 2027) governs the prudential supervision of insurers by their home-state authority, with EIOPA coordinating. Article 15 of Solvency II makes a home-state authorisation valid for the entire Union, including the right of establishment and the freedom to provide services: the passport. The Motor Insurance Directive (Directive 2009/103/EC, Article 3) requires each member state to ensure that civil liability for the use of vehicles based in its territory is covered by insurance. The Insurance Distribution Directive (Directive (EU) 2016/97) defines insurance distribution and insurance intermediaries, leaving the national categories of agent and broker to member states.

What the EU does not harmonise is at least as important for Japan. Whether an employer must insure its liability to employees, whether a profession must carry professional liability insurance, whether a builder must insure its ten-year liability, how work injuries are compensated and whether that is a social-security scheme or an insurance market: all of these are national. Germany's statutory accident insurance under Social Code Book VII covers employees by operation of law, with contributions paid by the employer and a duty to register with the competent accident insurance institution within a week of starting business. German lawyers must hold professional liability insurance under section 51 of the Federal Lawyers' Act and auditors under section 54 of the Public Accountants' Act. French constructors must insure their ten-year liability before works begin, with criminal penalties for failure. None of these is an EU rule, and none travels to Japan.

Compulsory at home, compulsory in Japan

Table 1: Compulsory insurance and statutory schemes for a business: Germany, France, the United Kingdom and Japan (selected national rules; as of 28 October 2026)
Area	Germany	France	United Kingdom (Great Britain)	Japan
Work injury	Statutory accident insurance (SGB VII): employees insured by law (section 2), employer pays contributions (section 150), employer must register within one week of starting business (section 192). Public scheme.	Social-security scheme for accidents at work and occupational disease (national rules; not examined in detail here).	Employers' Liability (Compulsory Insurance) Act 1969, section 1: every employer carrying on business in Great Britain must insure against liability for bodily injury or disease sustained by employees arising out of their employment, with an authorised insurer. A private insurance market, not a social-security scheme.	Workers' accident compensation insurance (public) applies to any business employing a worker; relationship arises on the day the business starts; employer pays the premium. Employer's civil liability survives, so a voluntary top-up is common.
Motor third-party liability	Compulsory (EU Motor Insurance Directive, national implementation)	Compulsory (same)	Compulsory (national law)	Compulsory automobile liability insurance (CALI) for every vehicle; bodily injury only; voluntary motor cover for the rest.
Professional liability	Compulsory for lawyers (BRAO section 51), auditors (WPO section 54) and certain other professions	Compulsory for lawyers (Law 71-1130, Article 27) and certain other professions	Required by regulators for certain professions	No general statutory mandate; sector licensing laws may impose requirements; clients commonly require it by contract.
Construction	No general ten-year insurance mandate	Ten-year liability insurance (assurance décennale) compulsory for constructors before works begin (Code des assurances, L241-1); dommages-ouvrage for the owner	No general mandate	No statutory mandate; contractors' all-risks and liability cover are required by project contracts.
General commercial property and liability	Voluntary	Voluntary (natural catastrophe guarantee attaches by law to property damage contracts; see below)	Voluntary	Voluntary; required in practice by leases, customers and lenders.

The table's lesson for Japan is simple. The two statutory layers a European company must file for in Japan are the public schemes (labour insurance, health and pension, CALI); everything else it buys because a contract or its own judgement requires it. A German company will not find a Berufsgenossenschaft to register with, but it will find a Labour Standards Inspection Office; a French builder will not be asked for a décennale certificate, but it will be asked for contractors' cover by its Japanese client; a British employer will not be told to buy employers' liability insurance, but it will want the Japanese top-up for the same reason it buys the UK policy.

Employees: from the Berufsgenossenschaft to the Labour Standards Inspection Office

The Japanese work-injury scheme is closer to the German model than to the British one. Article 3 of the Workers' Accident Compensation Insurance Act applies the scheme to businesses that employ workers; the Ministry of Health, Labour and Welfare states that it applies, as a rule, to every business employing even one worker regardless of size or industry; the insurance relationship arises by law on the day the business starts (Act on Collection of Labour Insurance Premiums, Article 3); and the employer pays the whole premium. The Japan External Trade Organization explains that the Japanese branch of a foreign company is treated as an incorporated business for social insurance and that labour insurance applies to the workers of a representative office other than the representative. Health insurance and employees' pension insurance apply to all incorporated entities.

One difference matters for program design. Under the Japanese scheme the employer's civil liability to an injured employee is not extinguished by the statutory benefits, so Japanese employers commonly buy a voluntary top-up, written as business accident or employer's liability insurance, that pays additional compensation and the employer's legal liability. A German risk manager used to the liability privilege that accompanies statutory accident insurance should not assume the same in Japan; a British one will recognise the top-up as the Japanese counterpart of the employers' liability policy. Staff seconded from Europe who become resident in Japan are persons resident in Japan for the purposes of the Japanese schemes and of Article 186 of the Insurance Business Act; the FSA's 2021 simplification of the permission procedure for home-country group cover was designed for such staff, and the group decides whether to use it or to cover them locally.

Your core liability policy and its Japanese counterparts

A German Betriebshaftpflichtversicherung, a French responsabilité civile exploitation or a British public liability policy is a single policy covering the business's liability to third parties for injury and damage arising from its operations, often with products liability attached or written alongside. Japan has no single standard form. Liability is commonly written by cause: premises (facility owner's) liability for the ownership, use and management of premises and for work performed, contractors' liability for construction and installation, and products liability for goods sold and work completed, with insurers offering packages that combine them. Contractual liability beyond legal liability is commonly excluded; whether the insurer conducts negotiations with the claimant is a matter of the wording; the territory is Japan unless extended, so exports from Japan and incidents abroad need attention. The practical exercise is to list what the European policy covers, map each element to a Japanese line, and close any gap locally or through the group's master policy.

Two further points. Additional-insured and waiver-of-subrogation clauses exist under some Japanese wordings but are not universal standard forms, and an English-language certificate for a given commercial policy is a question for the insurer; Japanese counterparties generally expect a certificate from a Japanese-licensed insurer. And on the litigation environment, which European companies sometimes ask about by reference to the United States: Japan's Supreme Court held in 1997 that the punitive-damages portion of a foreign judgment could not be enforced in Japan; that does not mean Japanese liability claims are small, and product liability suits and substantial awards do occur, but the US-style punitive exposure is not the frame for a Japanese liability program.

Product liability for goods imported into Japan

European manufacturers know product liability as a regime harmonised at EU level and implemented nationally. Japan has its own statute. Under Article 3 of the Product Liability Act (Act No. 85 of 1994), a manufacturer, processor or importer of a product, and a person whose name is shown on it as its manufacturer or in a similar way, is liable for damage to life, body or property caused by a defect in the product. A Japanese subsidiary that imports the group's products is the importer and carries that liability in Japan. Japanese customers and distributors ask for proof of products liability insurance, sometimes naming the customer as an additional insured, and the Japanese products policy should be checked for whether it covers only sales in Japan or also exports from Japan. Where the group runs a global products liability program, the Japanese policy is the local layer and the master is checked for overlap and gaps.

Property and natural catastrophe

European readers arrive with a useful instinct: natural perils are something you add to the property policy. In Germany the industry association describes Elementarschadenversicherung as an optional supplement to building and contents cover, and notes that earthquake is excluded from the standard residential building tariff and covered only through that supplement. In France the natural catastrophe guarantee is attached by law to property damage contracts and is triggered by an interministerial order declaring a state of natural catastrophe, with a legally fixed deductible.

Japan's structure is the German one without a state-backed layer for businesses. Standard commercial fire insurance excludes loss caused by earthquake, volcanic eruption and tsunami; earthquake cover is added by endorsement, commonly with its own limit (often a fraction of the sum insured) and deductible, on terms that are a matter of negotiation and capacity. The government-backed earthquake insurance scheme under the Earthquake Insurance Act covers only residential buildings and household contents (Article 2(2)); the Ministry of Finance states that office-only buildings and factories are outside it. There is no French-style guarantee that attaches automatically to a commercial property policy. Typhoon wind is generally within the fire policy's perils; flood may be sub-limited or reducible. Business interruption follows the property perils, so earthquake interruption is excluded unless earthquake is added on both sides. The decision a European group most often defers, and most regrets deferring, is the earthquake limit on a Japanese warehouse or plant. Our Japanese-language article on earthquake cover for businesses explains the mechanics.

Professional indemnity and D&O

Professional indemnity, compulsory at home for some European professions, is not generally mandated in Japan; it is required by clients and, for some licensed activities, by sector rules. Japanese professional and IT liability policies are commonly claims-made, so retroactive dates should be aligned with any period the Japanese entity was covered under the European program. Directors of a Japanese company owe duties to the company under the Companies Act; whether the group's D&O policy covers subsidiary directors depends on its wording, and a Japanese subsidiary with resident directors should confirm its position rather than assume the European policy responds.

No passporting into Japan: the European program and the Japanese local policy

Within the EEA, one authorisation and one policy can cover several member states. Japan is a third country to that system, and the EU is a third country to Japan's. Solvency II, Article 162, makes access to insurance business in the Union by an undertaking with its head office outside the Community subject to authorisation; Japan's Insurance Business Act, Article 186, prohibits in principle a foreign insurer without a branch in Japan from insuring persons resident in Japan or property located in Japan, with exclusions for reinsurance, international transit cargo, overseas travel and certain marine and aviation risks, and a case-by-case permission that must be refused where a Japanese-licensed insurer could easily provide an equivalent contract. The European insurer that covers the group across the EEA therefore needs a Japanese licence, or a Japanese fronting partner, to insure the Japanese entity's property and liabilities. Several European industrial insurers do hold Japanese licences or operate through Japanese branches, and the group's program may already have a route; what the program cannot do is treat Japan as another member state.

In design terms the Japanese entity gets a local admitted policy as its foundation; the European master sets the standard and responds above the local policy through difference-in-conditions and difference-in-limits clauses, provided the local policy is in force; financial interest cover, if used, insures the parent's own interest and pays the parent at home; and fronting, where the group wants its own carrier behind the Japanese risk, is lawful in structure because reinsurance is excluded from Article 186. Our article on global insurance programs in Japan works through these with a hypothetical case.

Buying in Japan: brokers, agents and language

European corporate insurance is largely brokered, and larger groups deal directly with industrial insurers. In Japan most corporate business is placed through agents who act for the insurer under the Insurance Business Act (Article 2(21)), may be exclusive to one insurer or represent several, and must tell the customer which insurers they can handle; the insurer is liable for the agent's conduct in solicitation (Article 283). Brokers are a separate registered category acting for the customer (Articles 286, 291 and 299), with 64 registered as of 1 September 2026, including the Japanese broking entities of international groups. Some international groups operate both a broking entity and an agency entity in Japan. The practical rule for a European risk manager is to ask any intermediary in which capacity it acts for the Japanese placement and, if an agent, which insurers it represents. Policies, certificates and claims are in Japanese; plan for Japanese-language administration in the Japanese entity, and confirm what English documentation the insurer can provide before promising it to head office.

A note for UK companies

A UK parent is outside the EU, so passporting was never part of its route to Japan, but the shape of its thinking is European: a compulsory employers' liability policy at home under the 1969 Act, public liability as the core voluntary cover, professional indemnity where regulators require it, and a brokered market. The Japanese translation is the same as for an EU company, with one adjustment: the UK employers' liability policy has no statutory counterpart in Japan because the Japanese work-injury scheme is public; what the UK company buys in Japan is the voluntary top-up above that scheme.

What changes in your procurement process

Stop at the EEA border. Remove Japan from the passported program's assumptions and treat it as a local-policy country.
File the public schemes first. Labour insurance and social insurance from the first hire; CALI for each vehicle. Then decide the employer's top-up.
Map the core liability policy by cause. Replace "Betriebshaftpflicht" or "public liability" with the Japanese lines (premises, contractors', products) and check contractual liability, territory and negotiation terms.
Treat the Japanese entity as importer. Products liability in Japan follows from the Product Liability Act; confirm cover for sales in Japan and exports from Japan, and the certificates customers require.
Decide earthquake explicitly. There is no automatic catastrophe layer for businesses; choose the limit and deductible when the property policy is placed, and confirm how the European master treats a Japanese earthquake loss above it.
Ask the intermediary which capacity it acts in, and plan for Japanese-language policies and claims.

How Nayuta Insurance Technologies can help

Nayuta Insurance Technologies is a Tokyo-based insurance agency whose corporate practice, Risk & Benefits, works with foreign-owned companies on the Japanese side of their insurance. For a European group, that means taking the program documents, the Japanese entity's leases and contracts and the entry plan, listing the exposures in Japan, translating the European cover into a specification a Japanese insurer can quote against (including the earthquake limit, the liability lines by cause, and the endorsements Japanese counterparties will accept), arranging the Japanese policies we are able to place, and keeping the Japanese schedule reconciled with the European master at each renewal. Our policy review service (Japanese) is the formal version of the first step. Communication with head office in English is supported on an email basis.

For transparency: in non-life insurance, Nayuta Insurance Technologies acts as an agent for a specific insurer. We do not operate a model of comparing and recommending products across multiple insurers, we do not act as an insurance broker, and we do not arrange European master policies, fronting agreements or financial interest cover. Where a program requires the Japanese local policy to come from a particular carrier's Japanese affiliate, we can still do the inventory, the specification and the reconciliation, and we will say plainly where the placement itself is outside what we can do. Our policy on comparative recommendation (Japanese) sets out our position.

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Frequently asked questions

Can our European insurer passport its policy to cover our Japanese subsidiary?

No. Passporting under Solvency II applies within the EEA. Japan's Insurance Business Act, Article 186, prohibits in principle a foreign insurer without a branch in Japan from insuring persons resident in Japan or property located in Japan, with exclusions for reinsurance, international transit cargo, overseas travel and certain marine and aviation risks, and a case-by-case permission. The Japanese entity's property and liabilities are insured with a Japanese-licensed insurer, which may be the Japanese licensed affiliate or fronting partner of the group's European carrier.

Is there a Berufsgenossenschaft in Japan?

Japan's work-injury scheme is public and employer-funded, like German statutory accident insurance, but it is administered by the state through the Labour Standards Inspection Office rather than by sector institutions, it applies to any business employing a worker from the day the business starts, and it does not extinguish the employer's civil liability, so Japanese employers commonly buy a voluntary top-up.

We must carry professional indemnity at home. Must we in Japan?

Japan has no general statutory mandate for professional liability insurance; sector licensing rules may impose requirements for particular activities, and clients commonly require cover by contract. Japanese professional and IT liability policies are commonly claims-made, so align retroactive dates with any period of cover under the European program.

Does Japan have a natural catastrophe guarantee like France's?

Not for businesses. Standard commercial fire insurance excludes earthquake, eruption and tsunami; earthquake cover is added by endorsement with its own limit and deductible. The government-backed earthquake scheme covers only residential buildings and household contents. Decide the earthquake limit when the property policy is placed.

We import our products into Japan. Is our EU product liability cover enough?

The Japanese entity that imports the products is liable under Article 3 of Japan's Product Liability Act in the same way as a manufacturer, and Japanese customers will ask it for proof of products liability insurance. Property and persons in Japan are inside Article 186, so a Japanese products liability policy is the usual answer, with the group's program checked for overlap and gaps.

Should we use our European broker's Japanese office?

Ask in which capacity it acts in Japan. Brokers are registered separately under the Insurance Business Act and owe a statutory duty of good faith to the customer; agents act for the insurer and may be exclusive to one insurer or represent several. Some international groups operate both kinds of entity in Japan. Either can work; the point is to know which you have and, for an agent, which insurers it represents.

Primary sources

This article is a general explanation of business insurance in Japan for companies headquartered in the European Union and the United Kingdom. It is not legal, tax or regulatory advice in any jurisdiction, and it does not describe or promote any particular insurer, product, policy or endorsement; European and Japanese arrangements are compared as closest counterparts, not equivalents, and European rules are summarised only to the extent needed for the comparison. Whether a claim is paid is determined by the insurer under the specific policy wording and facts. In non-life insurance, Nayuta Insurance Technologies acts as an agent for a specific insurer; see our policy on comparative recommendation.