Insurers in Japan now offer products that pay out to companies if employees go on parental leave, eyeing growing demand for such services from employers grappling with the impact of more people, particularly men, taking time off.

Two of the country’s largest property and casualty insurers, Sompo Holdings and Tokio Marine Holdings, recently started selling such services. Companies that meet certain conditions set by the insurers are eligible for compensation related to hiring costs incurred should an employee take childcare leave, such as placing recruitment ads.

The number of men who take paternity leave in Japan remains low compared to other developed countries with similar benefits, but the number who do has been steadily growing amid a government push. Data from the Ministry of Health, Labor and Welfare show that 14% of fathers took paternity leave in the last fiscal year ended March 31, up from just 3% in 2016. Men are entitled to up to a year of parental leave in Japan.

The increase in parents embracing such benefits, however, is exacerbating Japan’s long-standing labor shortage problem.

"Small- and medium-sized companies now face changes in the social environment such as labor shortages and revisions to child and nursing-care leave laws,” said Wataru Kawaguchi, a deputy manager at a core unit of Tokio Marine whose team developed the product.

"Securing personnel to fill in for absent employees can become a business management issue,” said Hiroyuki Aso, a senior deputy manager at Sompo.

Aso said that the new product, which will also apply to other needs like childbirth and caregiving, has attracted queries though there have been no orders so far.

Despite having one of the most generous parental leave allowances in the developed world, many in Japan still choose not to take leave due to cultural norms that at times punish those who put family before work. More than half of men who take paternity leave take less than two weeks of it, according to the health ministry.

The ruling Liberal Democratic Party has been promoting parental leave in a bid to boost low birth rates in the world’s third largest economy. New legislation that took effect in April requires firms to inform would-be fathers about paternity leave benefits, and ask if they would like to use it. From this month, parents can also take time off in installments until their child turns one.