Japan’s Highly Protected Insurance Industry Has Taxpayers On The Hook

Japan’s Insurance industry isn’t only heavily distorted as a result of protectionism but likewise exposes taxpayers heavily to losses.

That’s according to Economic Policy Journal’s Robert Wenzel.

Mr. Wenzel writes, (bold emphasis mine)

First, the Japanese government protected domestic insurers by limiting foreign insurance companies from providing insurance. Then, the government wrote regulations that limit payouts from earthquake damage.

Because of all this, many in the region, where the earthquake just struck, don't even have earthquake insurance.

There's also a loss-sharing agreement that remains in place and if the damage stretches into the billions (which it will), the Japanese government (read: taxpayer) will be on the hook for much of the bill that rightly should be picked up by the insurance companies involved.

No wonder the subtle cries over a prospective fiscal crisis.

No wonder too why the BoJ was quick to resort to massive inflationism.