A Different Mechanism from Traditional Completion Guarantees: Growing Adoption of 'Performance Guarantee Insurance' for Condominium Major Renovation Projects (Insurance Provider: Nisshin Fire & Marine Insurance Co., Ltd.)

The General Incorporated Association Mansion Anshin Center (Shibuya Ward, Tokyo) has released utilization statistics as of March 31, 2026, for the 'Performance Guarantee Insurance' for condominium major renovation projects offered by Nisshin Fire & Marine Insurance Co., Ltd. (hereinafter 'Nisshin Fire'), which the center handles as an insurance agent.

As of the end of March 2026, the cumulative number of buildings applying for the Performance Guarantee Insurance reached 209, with the number of eligible renovation contractors expanding to 90 companies (data collected from the center's agent network) [1].

In the current condominium major renovation industry, it can be difficult to obtain information about a contractor's ability to complete construction, leading to situations requiring careful consideration. Contributing factors may include rising construction material prices and labor costs, as well as changing business conditions in the construction sector.

In recent years, there have also been media reports concerning bid-rigging issues related to renovation projects. In light of these circumstances, some condominium management associations are reviewing available guarantee mechanisms. Under these conditions, Performance Guarantee Insurance—offered by a third-party insurer after reviewing contractors' financial conditions against established criteria—is being adopted as one option for major renovation projects.

Major renovation projects are critical for asset preservation

Condominium major renovation projects are conducted to maintain and preserve buildings, using reserve funds accumulated over long periods. In recent years, due to rising construction costs as well as changes in building scale and renovation scope, individual project costs have reached several hundred million yen in some cases (based on projects handled by the center) [1].

Renovation work typically includes multiple processes such as exterior wall repairs, waterproofing, steel component painting, sealing replacement, and temporary scaffolding installation, all of which require careful evaluation by management associations.

On the other hand, it can be difficult to assess a contractor's financial health, and in some cases, sufficient consideration of post-contract risks may not be conducted. In the construction industry, fluctuations in material prices, labor costs, and project timelines can impact a company's cash flow.

Impact of contractor financial conditions on construction projects

Changes in a contractor's financial condition may affect project progress. For example, construction may be suspended, schedules altered, or a new contractor may need to be selected.

In such cases, additional costs such as those for maintaining temporary facilities or re-planning may arise, potentially causing deviations from the original plan.

Moreover, evaluating a contractor's financial status requires specialized knowledge, which may limit the information available to management associations for decision-making.

Considerations regarding cost and risk balance

In renovation projects, considerations must extend beyond cost to include construction capability and financial stability.

Recently, due to significant external factors such as fluctuating material prices and labor costs, decisions based solely on price have become increasingly difficult. It is therefore considered important to evaluate contractors based on multiple, complex factors.

Features of Nisshin Fire's Performance Guarantee Insurance

Against this backdrop, Nisshin Fire's Performance Guarantee Insurance is being used as one risk mitigation measure for major renovation projects.

The insurance provides compensation, under certain conditions, for additional construction costs incurred if a project becomes difficult to continue due to a contractor's insolvency [2].

A key feature of this system is that contractors undergo a financial review as part of the insurance underwriting process. This allows management associations to use the evaluation results from a third-party institution as one reference in their decision-making.

*Note: The financial review does not guarantee future business performance.

As of the end of March 2026, 90 renovation contractors have passed this review [1].

(Agent: Mansion Anshin Center Performance Guarantee Insurance website: https://mansion-anshin.com/repair-company/)

Changing perceptions of guarantee systems

In light of media reports on renovation projects, some management associations are beginning to examine available guarantee mechanisms. Because the Performance Guarantee Insurance is underwritten by a damage insurance company, this aspect is considered one of its evaluation advantages.

Overview of utilization statistics

As of the end of March 2026, the cumulative number of buildings applying for the insurance reached 209. By region, the majority are located in the Greater Tokyo Area (130 buildings, approximately 62%) and the Kansai region (56 buildings, approximately 26%) [Figure 1] [1].

By project value, projects exceeding 100 million yen account for 132 buildings (approximately 63%) [Figure 2] [1], indicating significant adoption in higher-value projects.

Regarding adoption drivers, 102 buildings (49%) resulted from proposals by design firms, and 80 buildings (38%) were initiated by management association requests [Figure 3] [1]. Even within the center's handled cases, there is observable interest in guarantee systems and financial reviews [Nakajima2].

Future outlook

In the construction industry, multiple factors—including material supply, price trends, and international developments—may impact the business environment. In particular, fluctuations in raw material prices and logistics conditions can affect project timelines and costs.

Contractors' business environments are also expected to be influenced by these external factors, meaning management associations must carefully consider various risks.

[Figure 1]

●Source: Survey by Mansion Anshin Center (April 2022–March 2026, center-handled cases, denominator: 209 buildings)

*Regions classified based on condominium location

*Regional definitions follow center standards (Greater Tokyo Area: 1 Metropolis + 3 Prefectures; Kansai Region: major prefectures)

*Percentages may not total 100% due to rounding

[Figure 2]

●Source: Survey by Mansion Anshin Center (April 2022–March 2026, center-handled cases, denominator: 209 buildings)

*Project values based on initial contract amounts (excluding tax)

*Percentages may not total 100% due to rounding

[Figure 3]

●Source: Survey by General Incorporated Association Mansion Anshin Center (April 2022–March 2026, handled cases, valid responses: 209 buildings)

*'Design firm proposal' refers to cases introduced via proposal from Mansion Anshin Center

*'Management association request' refers to cases where the management association expressed a desire to join

*'Others' includes contractor proposals, etc.

*Percentages may not total 100% due to rounding

Importance of information disclosure

Condominium management association board members are often appointed on a rotating basis and may make decisions without specialized knowledge. Therefore, providing clear, accessible information about contractor financial risks and guarantee mechanisms is considered essential.

Performance Guarantee Insurance is recognized as one risk management tool for major renovation projects involving the use of reserve funds.

The General Incorporated Association Mansion Anshin Center states that it will continue to promote information dissemination and system adoption to help management associations make sound decisions.

[References]

[1] Agent: General Incorporated Association Mansion Anshin Center 'Performance Guarantee Insurance: Center Membership Statistics (as of March 2026)'

*Period: Contracts for which premiums were received between April 2022 and March 2026.

*This data aggregates information on all enrolled buildings, including prefecture, enrollment background, and project cost.

[2] Agent: General Incorporated Association Mansion Anshin Center Performance Guarantee Insurance System Explanation https://mansion-anshin.com/system/

[Inquiries regarding this matter]

General Incorporated Association Mansion Anshin Center (Co-developer and insurance agent for Performance Guarantee Insurance) Public Relations Contact: Takahiro Shibuya TEL: 050-3479-1551

Business Hours: Weekdays 10:00–17:00 Email: [email protected] URL: https://mansion-anshin.com/

Nisshin Fire & Marine Insurance Co., Ltd.

Market Development Department, Strategic Market Group 4-1-3, Tahei, Sumida Ward, Tokyo 130-0012, Orinas Tower 16F

TEL: 03-6705-2436

Business Hours: Weekdays 9:00–17:00

URL: https://www.nisshinfire.co.jp/

*This insurance is underwritten by Nisshin Fire & Marine Insurance Co., Ltd., with Mansion Anshin Center serving as co-developer and insurance agent. For detailed materials, application procedures, underwriting criteria, etc., please contact the above numbers.

Prepared: May 2026 Document No.: 2605-0009