New Japanese business insurance plans cover rogue staff, 'customer harassment'

TOKYO -- While abuse from customers, workplace bullying and viral employee pranks create headaches for Japanese companies, insurance firms are digging up new business opportunities, offering fresh products to better guard enterprises from such corporate risks.

Problem cases in Japan include one where a convenience store worker climbed inside a freezer and posted the image on social media, and an incident in which a part-time restaurant worker served dishes using food waste and posted the video online. Sompo Japan Insurance Inc. offers a special insurance plan for businesses to protect them from nuisance behavior just like this.

The special coverage is optional under "Business Master Plus," a comprehensive insurance plan for small and medium-sized firms that covers equipment failure and labor accidents. The special plan additionally covers costs to replace equipment due to workers' misconduct, as well as damage arising from the suspension of operations in such cases.

Damage from "customer harassment," where workers face abuse or unreasonable demands from customers and clients, is also covered under the plan. Such harassment sometimes leads to employees leaving their jobs. According to a labor ministry survey conducted in October 2020, customer harassment accounted for 19.5% of staff complaints fielded by companies, after power harassment at 48.2% and sexual harassment at 29.8%. The ministry guidelines call on companies to take measures against these forms of abuse.

Guidance on how to respond to customer harassment

Under Sompo Japan's special insurance, consultants with expertise in dealing with customer complaints offer businesses free advice on how they should initially respond. If companies need to consult lawyers, the cost will be covered depending on the content.

The insurer says it has received consultations about roughly 50 cases per month. When a beauty parlor sought advice about a customer who canceled their reservation without notice and refused to pay a cancellation fee, the special consultants advised the establishment to let the customer know that their failure to pay the fee could result in legal action.

When a construction company sought advice about a complaint it received from an individual claiming that their household goods were damaged by vibrations from construction work, the expert consultants advised the company "not to respond to their demand because the damage is not supported by objective evidence."

Following the special plan's release, some 14,000 companies have taken out the policy over the past two years. Many of the insured firms are small and midsized businesses that cannot afford to hire corporate lawyers to seek advice or develop manuals to deal with customer issues.

Takafumi Okada, an official at Sompo Japan's Commercial Business Strategy and Underwriting Department, said, "The initial response matters all the more because information can become viral on social media, and in some cases companies find it difficult to continue their business due to harmful rumors."

Ongoing prevention of power harassment covered

Insurance companies are also enhancing their existing products to cope with power harassment cases.

In October 2022, Tokyo Marine & Nichido Fire Insurance Co. launched a special plan covering the costs associated with preventing the recurrence of power harassment as part of a comprehensive work accident insurance plan for small and midsized businesses. While the product already covered financial compensation for victims of power harassment and sexual harassment, the additional plan boosted the coverage, paying up to 500,000 yen (approx. $3,800) per case for the cost of staff training and lectures to prevent recurrences.

In 2022, the insurer saw the contract numbers for this special plan climb roughly 1.2 times the previous year's figure due in part to the stricter responsibility laid on small and midsized companies under the revised power harassment prevention law that went into effect in April 2022.

"Companies are facing an ever-growing number of labor issues. We'd also like to get involved in our clients' advance risk management measures," a representative of Tokyo Marine & Nichido Fire Insurance said.

(Japanese original by Tomohiro Tsujimoto, Business News Department)