The current Japanese insurance industry focus huge inefficiencies within a huge market, while also experiencing huge changes as a result of deregulation. Under the market environment, we believe that there is  strong growth potential of online life insurance market.

 

Huge Market

Japan's life insurance market is huge, worth approximately JPY35 trillion. We believe there is a high need for life insurance. There were around 15.6 million new enrollments in fiscal 2018 despite approximately 90% of Japanese households have already taken out life insurance.

Japan's life insurance market

Source: Life Insurance Fact Book 2019 by The Life Insurance Association of Japan

*Ratio of households with policies is as of 2018.

Huge Inefficiencies

While the ratio of households with policies is roughly 90%, nearly 70% of survey respondents indicated that they have “insufficient knowledge” of life insurance, showing a clear asymmetry in the information possessed by the insurance company selling insurance and the customer buying it. Moreover, the No. 1 reason for not taking out life insurance among all age levels is that they “cannot afford to pay premiums”, so the industry is not meeting the needs of customers in terms of insurance premiums.

               Knowledge on life insurance

Reasons for having no intention of making insurance contract

Source: a nationwide report on the life insurance industry (2018) by the Japan Institute of Life Insurance

Huge Changes

The publication of Customer-Oriented Business Conduct Principles by the Financial Services Agency amongst other efforts have led to the promotion of the policy of “visualizing” financial institution conduct and the products sold to customers. Customer behavior and needs have changed along with changes in digital devices. These factors are changing the environment surrounding insurance companies.

Changes in purchasing methods due to the proliferation of smartphones

Purchases via smartphones are increasing as the size of the e-commerce market expands. This is a trend in the size of the B to C e-commerce market (selling goods) as shown below. 

 

 

Source: E-Commerce Market Survey by Ministry of Economy, Trade and Industry

Growth Potential of Online Life Insurance Market

According to research by the Japan Institute of Life Insurance released in September 2018, about 12% of potential subscribers of life insurance intended to acquire a policy through the Internet in the future although only around 3% of life insurance subscribers actually did so. Additionally, in our fellow industry of non-life insurance, the share of direct automobile insurance has reached approximately 8% as the market has been steadily growing. Given these circumstances, we believe that the room for growth in the online life insurance market certainly exists.

 Source: a nationwide report on the life insurance industry (2018) by the Japan Institute of Life Insurance