Rakuten General Insurance is introducing a system which determines non-life insurance premiums according to the risk of flooding during heavy rains. To start in April, the insurance system is said to be the first in the country in which an insurer charges premiums according to flood risk.
Rakuten General Insurance will calculate the risk of flood damage based on the hazard map of the Ministry of Land, Infrastructure, Transport and Tourism.

The cover will be available through fire insurance bought from Rakuten. Fire insurance for homes will be classified into four categories according to the level of flood risk, such as whether the house is on a river or on a hill. 

The premium for a home in the “A” category, which has the lowest risk, such as being sited on a hill, is the least, while the premium for the “D” category, which has the highest risk, such as for a home situated along a lowland river, is highest.

Japan’s largest non-life insurer, Tokio Marine & Nichido Fire Insurance, has also begun to consider implementing such a system, and the practice may spread throughout the industry.

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