Fronting strategies are essential for leveraging overseas reinsurance capabilities.
In Japan, insurance contracts with unlicensed foreign insurance companies (direct insurance) are generally prohibited, with the exception of cases where permission from the Prime Minister is required before applying for a contract. Generally, direct insurance is effective in cases of special risks for which no insurance products are available domestically.
When utilizing the reinsurance market to ensure the capacity of insurance products that can be underwritten domestically, a method called fronting is used. An insurance company that accepts fronting (called a fronter, or Cedent overseas) transfers the risk in the form of reinsurance to an overseas insurer arranged by a reinsurance broker commissioned by the client. This is called out-reinsurance.
As a reinsurance broker commissioned by our clients, we conduct overseas insurance marketing and, using fronting techniques, provide insurance capacity that is difficult to procure domestically in Japan.