Flux-reversal machine (FRM) has simple structure making it cost effective and suitable for mass production. However, there is notable permanent magnet flux leakage which deteriorates the characteristics of the FRM. The problem of irreversible demagnetization of permanent magnet is also important to the reliability of the FRM. To improve the various characteristics and reliability, various design techniques have been studied and a novel FRM with an Inset-Type-Permanent- Magnet structure has been proposed. In this paper, we especially concentrate on the irreversible demagnetization characteristics of permanent magnets in the FRM. To analyze the characteristics, a two-dimensional finite-element method (2D FEM) considering nonlinear analysis of permanent magnets is used.