Japan’s FSA Surveys 17 Institutions on Storm and Flood Risk Practices

Japan’s storm and flood risk survey now names the specific analytical techniques the Financial Services Agency (FSA) treats as standard practice across a cohort of 17 financial institutions. Newly published, the report follows up on the FSA’s July 2022 climate-related risk management guidance by describing, institution by institution, how banks and insurers have moved from box-ticking toward analytics. It lands weeks after the same regulator’s FY2025 compilation showed Japanese insurers posting stronger results — raising the question of whether that profitability now funds the more sophisticated risk modeling the FSA describes as ordinary practice.

What the FSA counts as advanced practice

The FSA surveyed major banks, regional banks and insurers on their management of storm and flood risk and on how they support affected clients, a scope confirmed in the FSA’s report on storm and flood risk practices. Across the 17 institutions covered, the regulator found that climate-related financial risks, including storm and flood exposure, are now widely recognized as key risks rather than peripheral concerns.

What separates this survey from a routine check-in is the level of technical detail the FSA volunteers. Institutions’ risk management has advanced through analyses built on more refined data and more sophisticated analytical methods, alongside enhanced investment and lending decision-making — the very criteria the regulator now appears to treat as the baseline for adequate practice among a defined cohort, according to the underlying survey document published alongside the report. On the client-facing side, banks and insurers are offering disaster-related repayment relief products, financing for adaptation investments, and dedicated storm and flood risk assessment services — a shift from selling cover to actively managing exposure alongside customers.

Profitability meets the supervisory bar

The timing sharpens the question. A month before the storm and flood survey, the FSA compiled FY2025 financial results announced by Japan’s major insurance companies for the year ended 31 March 2026. Combined net income at major life insurers reached roughly ¥2.54 trillion on a non-consolidated basis, up for a second consecutive year. Combined premium and other income climbed to approximately ¥38.9 trillion, above both preceding years, according to the FSA’s compilation of major insurers’ FY2025 financial results.

Non-life carriers show a similar trajectory: Tokio Marine Holdings’ insurance underwriting revenue rose to about ¥6.53 trillion for the year, up on the prior year. Whether that improving top line, detailed in Japan’s insurers’ FY2025 results across life, non-life premiums and solvency, actually funds the data infrastructure and modeling capability the FSA now describes as ordinary is a separate question from whether it merely coincides with it. A regulator naming specific analytical techniques as standard practice, at the exact moment its own data shows the sector has more room to invest, is not a coincidence worth ignoring.

That sequencing is unlikely to be lost on either insurers or their supervisors. Building the exposure data, mapping capability and underwriting models the FSA now references as ordinary practice requires sustained investment in specialist staff, third-party data licenses and modeling infrastructure — costs that are easier to justify against a rising premium base and growing net income than against a shrinking one. Framed that way, the storm and flood survey reads less like an isolated compliance exercise and more like the FSA calibrating its expectations to a sector it judges can now afford to meet them.

A survey-and-publish playbook, twice in one year

The storm and flood report is not an isolated exercise. It is the FSA’s second major supervisory practice survey this year, following the same regulator’s work with the Bank of Japan on frontier-AI and cybersecurity measures at insurers, covered in the FSA and BOJ’s frontier-AI cybersecurity measures for insurers. Taken together, the two exercises describe a consistent method: survey a defined cohort, name the specific practices that separate adequate from advanced, and publish the findings rather than issue new binding rules.

That approach lets the FSA raise the bar on both climate and technology risk without opening a formal rulemaking process, while still giving supervised institutions and the market a public benchmark to measure themselves against. Other prudential regulators watching how to move climate supervision beyond generic guidance have a template sitting in plain view.

Manageable losses, and a nudge rather than a mandate

The surveyed institutions themselves offer a measured read on current exposure: actual losses from storm and flood damage have, so far, remained at a manageable level relative to their financial condition and operations. Drawing on lessons from past disasters, institutions have also reviewed and enhanced their own business continuity plans and adaptation measures — supervisory discipline applied to their own operations, not just to underwriting and lending books.

The FSA has said it will keep monitoring how financial institutions manage climate-related financial risks, including storm and flood risk, and client support, while taking into account the size, characteristics and risk profile of individual institutions — language that signals continued supervisory nudging rather than a uniform mandate. That stands in contrast to jurisdictions elsewhere in the region taking a harder legislative line, such as New Zealand’s climate adaptation bill and its insurer funding provisions, where lawmakers rather than supervisors are setting the terms of who pays for adaptation.

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Sources used

• Japan FSA — storm and flood risk management practices report
• Japan FSA — survey of storm and flood risk management practices (PDF)
• Japan FSA — major insurance companies’ financial results compilation
• Japan FSA — life insurance companies’ results data (PDF)
• Japan FSA — non-life insurance companies’ results data (PDF)