Japanese life insurers face mounting unrealized losses (¥9.6 trillion) on legacy government bonds as rates rise, with surrender payouts jumping 40% in H1 2026. However, this reflects portfolio reallocation rather than liquidity crisis: Japanese policyholders are rationally shifting to higher-yielding assets and competing products as rate cycles shift. Thailand remains insulated from similar pressures—the phenomenon will only materialize if Thai rates rise significantly. Key risk signal: forced bond sales if surrenders spike abnormally alongside continued rate hikes.