Japan's insurance regulator has released new regulations, that will come into effect from 1 March 2028, requiring multi-insurer agencies to compare several products aligned with customer intent before making recommendations.
The Financial Services Agency has clamped down on a practice known as comparison-based recommendation sales activity, that prioritises products with higher commissions and will now shift the industry toward a customer-first sales model. Agencies will also be required to explain their recommendation rationale and retain sales records. The regulatory overhaul comes in the wake of the Bigmotor insurance fraud scandal in 2024, which exposed conflicts of interest between agencies and insurers.
Multi-insurer agencies run by insurance companies and car dealerships are the target of the new regulations. The new rules require multi-insurer agencies to compare various insurance packages, determine the customer's intent as much as possible, and suggest the best choice. Additionally, agencies are required to provide a detailed explanation for the recommendation of a specific product. Agencies must attempt to comprehend preferences by providing examples of important factors, even in cases where client intent is ambiguous.
The new rules will require agencies to keep detailed records of how they sell products. This allows regulators to look back later and check whether the agency was actually helping the customer, or just trying to make a higher commission for themselves.