The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.
It looks like it's a reinsurance program:
https://www.mof.go.jp/english/policy/financial_system/earthq...
So, I think the answer is "no".
I've always treated cars like houses are in the USA- I buy an older higher end car like a Porsche, keep it in perfect shape, and expect it to appreciate- and it does. Most cars I've owned I ultimately sold for much more than I paid. I've never understood why anyone would waste money on a depreciating car, especially when a fully depreciated high end car is so much nicer and cheaper than a low end new one. Airplanes are not mechanically that different than a car, yet generally last and hold value if maintained.
I've also never understood why people in the USA assume houses will always appreciate, as if it is a law of nature or something- when at its core houses can't appreciate forever relative to inflation, because there is a hard cap somewhere below people paying 100% of income for housing. This basically proves it is just a combination of a culture that values older housing in the USA and regulatory capture preventing new construction. New houses are often seen as "cold," "sterile," or "lacking character" in the USA- and the stereotype of a successful wealthy person is in a giant old mansion.
When you build you civilization on active volcanoes having long-lasting buildings may not be a reasonable assumption.
And, yes!, they have insurance. So if you can insure buildings in volcano country, you can insure anything, anywhere, maybe?