Japan earthquake insurance public-private scheme

Overview

Japanese household earthquake insurance is not a normal private non-life product. It is a public-private scheme involving private non-life insurers, Japan Earthquake Reinsurance, and the Japanese government. It is normally attached to household fire insurance and is designed for residential buildings and household goods, with statutory product constraints, payout classifications, and a government-backed reinsurance structure.

Use this page with nat-cat reinsurance Japan, Japan non-life big three, Japan Earthquake Reinsurance, Toa Reinsurance, Tokio Marine, MS&AD, and Sompo.

Scheme Map

Layer	Role
Policyholder	Buys household earthquake coverage attached to fire insurance.
Primary non-life insurer	Sells / services the policy and pays claims through the scheme route.
Japan Earthquake Reinsurance	Receives reinsurance responsibility from private insurers and redistributes risk under the scheme.
Private non-life industry	Shares part of the responsibility up to defined layers / limits.
Government	Provides reinsurance backing and absorbs a large share of extreme loss layers.
MOF / public finance layer	Maintains the special-account / fiscal route for the government responsibility.

The public-policy purpose is stable availability. Earthquake risk can produce correlated, severe, geographically concentrated losses that are difficult for private insurers to absorb alone. The scheme therefore uses public reinsurance to keep household earthquake coverage available at a socially acceptable level.

Product Boundary

Question	Scheme answer
Can a household buy standalone earthquake insurance?	The standard route is attached to fire insurance; earthquake-only standalone purchase is not the ordinary structure.
What property is covered?	Residential buildings and household goods, not all commercial property risk.
What peril is covered?	Damage caused by earthquake, volcanic eruption, or tsunami, including related fire / destruction / burial / washout categories under the product rules.
Is fire insurance enough for earthquake fire?	Ordinary fire insurance generally does not cover earthquake-caused fire damage; earthquake insurance is the route for that exposure.
Is the product fully private?	No. The government participates through reinsurance and responsibility sharing.

Reinsurance Mechanics

Japanese Earthquake Reinsurance publishes a public scheme map. Private non-life insurers cede earthquake-insurance responsibilities into the scheme. Japan Earthquake Reinsurance standardizes / redistributes those responsibilities between itself, private insurers, and the government. The total payment limit and layer shares are date-specific public data.

Layer amounts and total payment limits are recorded with the source date from Japan Earthquake Reinsurance / MOF materials.

Difference From Nat-Cat Reinsurance

Topic	Earthquake scheme	Broader nat-cat reinsurance
Main insured	Household residential building / household goods	Commercial property, motor, marine, overseas P&C, business interruption, specialty lines
Risk-transfer design	Statutory public-private framework	Private reinsurance, retrocession, cat bonds, group retention, capital markets
Public role	Direct government reinsurance participation	Usually indirect, except public disaster finance and policy measures
FinWiki route	This page	natcat-reinsurance-japan

Do not use the household earthquake scheme to infer the entire catastrophe exposure of Tokio Marine, MS&AD, or Sompo. Large non-life groups also write commercial, overseas, and non-earthquake catastrophe risks that sit outside this public-private household scheme.

Scheme Effects

The public-private scheme has the following structural effects:

Private insurers offer household earthquake coverage without retaining the full tail risk alone.
Government reinsurance participation is part of disaster-risk public finance.
Reinsurance structure changes private-sector retention and claim-payment responsibility by layer.
Premiums, coverage limits, payout categories, and reinsurance responsibility are public-policy variables.
Public-private risk sharing connects this route to policy finance as well as insurance.

Source Fields

Household earthquake insurance or broader catastrophe reinsurance category.
Numeric limits or layers with Japan Earthquake Reinsurance / MOF source date.
Link company-level non-life exposure to non-life big three and nat-cat reinsurance Japan.
Link public scheme mechanics to Japan Earthquake Reinsurance.
Boundary between household earthquake scheme and commercial catastrophe loss.

Sources

Japan Earthquake Reinsurance: earthquake insurance scheme and reinsurance scheme.
Ministry of Finance: earthquake insurance policy pages and special account route.
General Insurance Association of Japan: consumer-facing earthquake insurance explanation.
General Insurance Rating Organization of Japan: earthquake insurance rate-making material.