FALIA Invitational Seminar in Japan
“Risk Management Course”
Overview of Life Ins. Industry
in Japan
November 9th, 2016
Genjiro Saito
Chief, International Affairs
The Life Insurance Association of Japan
Contents
I Basic Information of Japan
II Japan’s Position in the World Life Insurance Market
III Overview of Life Insurance Business in Japan
IV Brief History of Japanese Life Insurance Industry
V Addressing the issues
VI The Life Insurance Association of Japan
2
I Basic Information of Japan
I Basic Information of Japan
1. General Information
Name
Japan
Area
377,914㎢ (rank 60th)
Population
127 million (rank 10th)
Capital
Tokyo
Language
Japanese
Main Religion
Shinto/Buddhism
Government
Prime Minister: Shinzo Abe (Liberal Democratic Party)
Trade
Import: crude oil, petroleum products, LNG
(liquefied natural gas), clothes, coal, non-ferrous
metal, semiconductor electric component
Export: automobile, auto component, steel,
semiconductor electric component, boats and
ships, plastic, engines and turbines
4
I Basic Information of Japan
2. Economic Trends
(1) Changes in Nominal GDP
(2) Stock Price (The Nikkei Stock Average)
(yen trillion)
Source: IMF - World Economic Outlook Databases, Cabinet Office
600
(yen)
Source: Nihon Keizai Shimbun
45000
40000
500
17,391.4 yen (as of 26th October, 2016)
35000
400
30000
25000
300
20000
200
15000
Nominal GDP (2015): 498.9 trillion yen
Growth Rate (2015): 2.46%
GDP per capita (2015): 3.93 million yen
100
10000
5000
0
(3) Interest Rate (JGB 10-year yield)
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
(4) Yen-Dollar Exchange Rate
(%)
Source: Ministry of Finance
8
(yen)
Source: Mitsubishi UFJ Research and Consulting
160.00
7
1 dollar = 104.18 yen
(as of 26th October, 2016)
150.00
6
140.00
5
130.00
4
120.00
3
110.00
2
100.00
1
90.00
80.00
-0.064% (as of 25th October 2016)
70.00
2015
2014
2012
2011
2009
2008
2006
2005
2003
2002
2000
1999
1997
1996
1994
60.00
1993
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
-2
1991
-1
1990
0
5
I Basic Information of Japan
3. Aging Population in the World
Total fertility rate (births per woman) (Year 2014)
4.0
Papua New Guinea
3.5
Aging Population and
Declining Birthrate
Philippines
3.0
Mongolia
2.5
2.0
Indonesia
India
Uzbekistan
Bangladesh
Myanmar
Sri Lanka
USA
New Zealand
Australia
France
Vietnam
Malaysia
China
Russia
UK
1.5
Thailand
Singapore
1.0
0.00%
5.00%
10.00%
South Korea
Taiwan
15.00%
Japan
Germany
20.00%
25.00%
30.00%
Proportion of population aged 65 and over (% of total population) (Year 2015)
Source: World Bank, National Institute of Population and Social Security Research
6
7
I Basic Information of Japan
4. Overview of Social Security System
Insurance Products
<Social Security>
Public Pension
provided by Japanese
Life insurance Companies
Complement
Old Age Benefit
Fixed Annuity
Variable Annuity
Survivor Benefit
Whole Life Insurance
Term Insurance
Endowment Insurance
Public
Health Insurance
Medical Insurance
Cancer Insurance
Public
Long-term care
Insurance
Long-term care Insurance
8
I Basic Information of Japan
(a) Public Pension
Survivor Benefit
Old Age Benefit
If a survivor has a child
Widow’s Age
Employees’ Pension Insurance
65
Survivors’
Employees’
Pension
60
+
Survivors’
Basic
Pension
OR
Widow’s
Pension
Basic Pension
(Self-employed)
(Employee)
Cost




Premium
self-employed ･･･ ¥16,260/M
• employee
･･･ 18.182% of salary
Public Pension can use fund (¥135 trillion) to ensure paying benefit
sustainably.
Benefit
Starting
age
• 65 years old


National Government Subsidies
•

( Employee )
Some older people can receive it from 60 years old.
Amount
self-employed ･･･ ¥780,100/Y
• employee
･･･ income-related amount/Y
Cost
Paid

as Public Pension (Old Age Benefit)
Benefit
Survivors’
Employees’ Pension
• Eligibility ･･･ Employee
• Amount ･･･ 3/4 of Old Age Benefit(Pension)
Widow’s Pension
Eligibility ･･･ Self-employed
Age of widow in age 60-65
• Amount
･･･ 3/4 of Old Age Benefit(Pension)
•
Survivors’
•
Basic Pension
Eligibility ･･･ Employee and Self-employed
•
Survivors have children
Amount ･･･ ¥780,100/Y
•
is adjusted not only for price fluctuation but also for a decrease
in population.
+ ¥224,500/Y per child
 Amount
Eligibility
to receive pension benefit
• premium payment for 25 years(to be10 years after Oct 2017)
( Self-employed )
Lump-sum
payment
･ Eligibility ･･･ Not falling under abovementioned categories
･ Amount ･･･ ¥120,000～320,000 proportional to the payment period
9
I Basic Information of Japan
(b) Public Health Insurance
(c) Public Long-term Care Insurance
Age
Elderly Medical Care System
Age
65
Public long-term care insurance
75
Retirement
age
Society-managed
Health Insurance
( Employee )

Insured person who
needs care due to
age-related diseases
Others
(Self-employed)
Cost

40
National
Health
Insurance
Cost


National and Local Government Subsidies

National and Local Government Subsidies

Premium
• Society-managed Health Insurance fixed % of salary
• National Health Insurance/Elderly Medical Care System
premium determined by local government

Premium
• Insured persons who are 40-65 years old premium fixed
depending on Public Health Insurance
• Insured persons who are 65- years old premium determined by
local government
Benefit
Benefit
in Kind
• 70% of Medical Service Cost
 70%
may increase to 80%or 90% when insured person is under 6
years old or over 70 years old.
 Out
of pocket expense is limited depending on age and income of
insured person.
 Medical
Service doesn’t include some highly-advanced medical
technology.
Benefit
in Cash
• Child birth allowance

Benefit
Benefit
in Kind
90% of Long-term Care Service Cost
• Insured persons who are 40-65 years old can receive benefit
only when they need long-term care due to age-related diseases.
•
 Out
of pocket expense is limited depending on age and income of
insured person.
 Long-term
Care Service Cost is fixed depending on care-needs of
insured person.
II Japan’s Position
in the World Life Insurance Market
11
II Japan’s Position in the World Life Insurance Market
Japan’s Position in the World Life Insurance Market
<Life Insurance Premium Volume by country in 2015>
Ranking
Country
Share in World Market
<New Premium Written by company in 2014>
Ran
king
Company name
Ran
king
Company name
19.90%
1
UnitedHealth Group Inc.
11
People’s Ins (Group) Co of
China Ltd.
13.57%
2
AXA S.A.
12
Prudential plc
United Kingdom
8.47%
3
Allianz SE
13
Japan Post Insurance
Co., Ltd.
4
PR China
8.32%
4
Assicurazioni Generali
S.p.A.
14
Ping An Ins (Group) Co of
China Ltd.
5
France
5.93%
5
Anthem, Inc.
15
Zurich Insurance Group
Ltd.
6
Italy
4.93%
6
China Life Insurance
(Group) Co.
16
National Mut Ins Fed
Agricultural Coop.
7
South Korea
3.88%
7
State Farm Group
17
Humana Inc.
8
Germany
3.82%
8
Kaiser Foundation Group
of Health Plans
18
Dai-ichi Life Insurance
Company, Limited
9
Taiwan
3.14%
9
Munich Reinsurance
Company
19
Nippon Life Insurance
Company
10
India
2.24%
10
Aetna Inc.
20
Berkshire Hathaway Inc.
1
United States
2
Japan
3
III Overview of
Life Insurance Business in Japan
III Overview of Life Insurance Business in Japan
(1) Changes in Life Insurance Ownership Rate per Households (including Annuity)
(%)
100
92.3 91.3 91.6
90.5
89.4 88.5 89.6
88
90
93.7
95
93 91.8
89.6
87.5
86 85.8
80
71
70
60
50
40
1965 1968 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
13
Source: Japan Institute of Life Insurance: Consumer Survey
Note: The data includes the total of private life insurance (including Japan Post Insurance), postal insurance and JA cooperative
III Overview of Life Insurance Business in Japan
(2) Number of Life Insurance Policies Owned by Household
(Number)
6
4.8
5
4.1 4.1
4
3
3
4.3
5
4.9
4.6
4.3 4.2 4.2
4.1
3.8
3.2
2.7 2.8
2
1
0
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
14
Source: Japan Institute of Life Insurance: Consumer Survey
III Overview of Life Insurance Business in Japan
(3) Average Amount of Coverage per Household
(yen million)
50
46.3545.66
41.78
41.41
45
40
36.97
35
32.08
30
24.18
25
19.77
20
13.6
15
10
5
32.69
29.12
27.63
24.23
9.56
4.33
0
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Source: Japan Institute of Life Insurance: Consumer Survey
15
III Overview of Life Insurance Business in Japan
(4) Annual Premium Payment per Household
Proportion of annual premium to total annual income
12.0%
9.4%
10.0%
8.4%
8.0%
6.9%
8.9%
9.6%
638
10.1%
676
574
7.4%
478
6.0%
400
331
4.0%
10.0%
9.2% 9.2%
800
700
8.8%
600
8.0%
610
531
(thousand yen)
7.4%
526
455
500
400
418
385
252
300
200
2.0%
100
Annual premium
0.0%
0
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Source: Japan Institute of Life Insurance: Consumer Survey, Cabinet Office of Japan
16
III Overview of Life Insurance Business in Japan
(5) Purpose of Life Insurance Ownership
0.0%
Medical or surgery expense
1
Survivor
2
Funeral expense
3
Educational and marriage expenses of children
4
Accident
5
Post-retirement life
6
Saving
7
Long-term care expense
8
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
58.5%
56.3%
53.1%
60.5%
13.0%
12.5%
7.9%
10.9%
7.7%
7.7%
8.9%
19.4%
2015
2003
6.1%
7.1%
2.9%
4.4%
<Multiple choice question>
Source: Japan Institute of Life Insurance: consumer survey 17
III Overview of Life Insurance Business in Japan
(6) Share of Distribution Channel
2007
2010
2013
2016
56.7
51.7
49.7
47.1
House visit
38.8
33.0
31.4
28.3
Workplace
17.9
18.7
18.3
18.8
5.7
5.2
5.8
5.6
Internet
1.0
1.0
1.5
2.0
TV, Newspaper, Magazine
4.7
4.2
4.3
3.6
11.2
16.9
15.8
15.6
2.8
2.7
2.5
2.8
Bank
2.7
2.4
2.4
2.6
Securities Firm
0.1
0.1
0.1
0.2
3.8
6.1
9.4
9.9
At the Counter
-
-
3.4
4.3
Sales Representative
-
-
6.1
5.6
Via Workplace or Labor Unions
6.3
7.4
6.6
7.8
Others
9.9
6.5
7.1
7.4
Tied Sales Agents
Direct Sale
Office of Insurer
Bank/Securities Firm
Sales Agency
18
Source: FY 2016 Survey on Life Protection, Japan Institute of Life Insurance
III Overview of Life Insurance Business in Japan
(7) Life Insurance Companies in Japan
Total ： 41 (as of October, 2016)
Premium Income of Japanese Life Insurers in FY2015
0
Domestic: 25
1000
2000
3000
4000
Branch offices: 3
5409.598
Dai-ichi
4548.771
Meiji Yasuda
3357.042
3041.426
Prudential
2335.612
MS&AD
1760.582
T&D
1569.949
Aflac
*Foreign stake of 50% or more
Metlife
Sony
(Note)
-Nippon: Nippon + Mitsui;
-Dai-ichi: Dai-ichi + Dai-ichi Frontier + Neo First;
-Sumitomo: Sumitomo + Medicare;
-Prudential: Gibraltar + Prudential + PGF;
-MS&AD: Mitsui Sumitomo Aioi + Primary;
-T&D: Taiyo + Daido + T&D;
-Sony: Sony + Aegon Sony;
-Fukoku: Fukoku + Fukokushinrai;
-AXA: AXA Life + AXA Direct
1476.78
1457.221
1097.79
Tokio Marine
802.851
Fukoku
788.407
Manulife
Axa
7000
6628.922
Sumitomo
Foreign* : 16
6000
Nippon
Japan Post
Non-Life subsidiaries: 4
5000
676.169
587.221
(yen billion)
19
Source: The Life Insurance Association of Japan
III History of Life Insurance Industry in Japan
(8) Number of Life Insurance Sales-Person
(Thousand)
tied sales agents
sales representatives at agencies (including Banks)
1,200
1,000
912
800
693 714 722
747
989
949 971
1,0051,015
992 999
1,011
777
600
445 442 428 421
400
400 395 390
354 342 330
163 181
200
313 298
296 284 268
264 259 249 246 248 251 241 237
234 229 228 230
232
204
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
20
Source: The Life Insurance Association of Japan
III Overview of Life Insurance Business in Japan
(9) Number of Individual Insurance Contracts
New policies
Policies in Force
(Number; million)
20
200
18
180
16
14
1.60
1.43
1.47
1.57
1.52
1.57
160
18.99
120
10
100
8
12.78
20.43
140
12
6
(Number; million)
13.40
14.89
14.41
15.05
15.86
4
40
2
20
20.76
19.76
80
60
20.48
20.50
121.91
127.21
2010
2011
136.02
143.88
151.73
160.12
0
0
2010
2011
2012
Individual Life Insurance
2013
2014
Individual Annuities
2015
2012
Individual Life Insurance
2013
2014
2015
Individual Annuities
Source: The Life Insurance Association of Japan
21
III Overview of Life Insurance Business in Japan
(10) Individual Insurance Share by Type
New Policies (FY2015)
Variable
Annuity, 1.34
Variable
Annuity, 1.31
Juvenile,
4.85
Policies in Force (FY2015)
Fixed
Annuity,
7.44
Others,
6.27
Cancer, 12.93
Medical,
20.86
Whole Life,
24.88
Term Life,
12.48
Endowment,
8.98
Others, 4.57
Fixed
Annuity,
10.14
Juvenile, 3.95
Whole Life,
29.27
Cancer, 12.79
Medical,
18.64
Term Life,
11.48
Endowment,
7.82
Source: The Life Insurance Association of Japan
22
III Overview of Life Insurance Business in Japan
(11) Premium Income
(yen billion)
Individual Life Insurance
Individual Annuities
40000
36,289
37,140
34,454
35000
3,836
4,276
3,926
30000
3,813
25000
1,116
1,114
4,679
Group Life Insurance
3,874
3,684
1,109
4,374
Group Annuities
37,222
34,738
2,227
2,740
4,176
3,852
1,119
1,113
5,154
Others
37,748
1,724
4,563
1,125
4,730
4,312
4,802
20000
15000
10000
20,448
22,734
24,099
22,721
24,546
25,607
2014
2015
5000
0
2010
2011
2012
2013
Source: The Life Insurance Association of Japan
23
III Overview of Life Insurance Business in Japan
(12) Insurance Payment
Claims Paid
(yen billion)
Annuities Paid
Benefits
Surrender Benefits Paid
Other
40,000
35,000
30,000
33,681
32,049
2,155
5,799
25,000
3,976
20,000
2,876
17,244
3,947
8,000
8,772
31,686
2,445
3,225
5,680
5,867
3,805
3,937
4,054
3,360
4,500
15,000
10,000
2,918
31,209
3,135
16,143
34,953
32,454
3,913
4,066
5,197
7,460
4,097
4,860
15,296
14,308
12,971
12,125
2012
2013
2014
2015
5,000
0
2010
2011
Source: The Life Insurance Association of Japan 24
III Overview of Life Insurance Business in Japan
(13) Profit
(yen billion)
Basic Profit
Ordinary Profit
4500
3500
3,308
3,063
2,893
2,670
2500 2,236
2,463
2,261
2,153
1,464.8
631.6
2,503
2,422
2,193
1,701.7
1500
2,690
2,556
2,144
1,602.4
1,802.9 1,754.6
3,016.8
2,870
2,638.3
2,355.1
2,034
2,019
1,731
1,480.3 1,419
1,332.3
525.7
500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-500
(1,001.0)
-1500
Basic profit represents the profitability of the life insurance business.
*excluding Japan Post Insurance
*Basic Profit = Ordinary Profit - Capital Gain/Loss - Nonrecurring income/loss
Source: The Life Insurance Association of Japan
25
IV Brief History of
Life Insurance Industry in Japan
IV Brief History of Life Insurance Industry in Japan
Total Premium Income and GDP
(billion yen)
Proportion of total premium income to GDP
40,000
7.14%
35,000
6.08%
30,000
5.62%
6.00%
5.00%
3.34%
15,000
2.39%
1.06%
2.61%
27,321
1.53%
15,480
5,000
0
6.13%
4.69%
20,000
92
255
1,800
3,981
1955
1960
1970
1975
8.00%
7.00%
5.28%
25,000
10,000
7.56%
30,762
34,454
26,941
37,748
4.00%
3.00%
28,333
2.00%
Premium Income
1.00%
8,226
0.00%
1980
1985
1990
1995
2000
2005
2010
2015
Average Number of Members of Ordinary Households
5.50
4.50
3.50
3.28
4.68
2.76
2.49
2.50
1.50
1955
1960
1970
1975
1980
1985
1990
1995
2000
2005
2010
2014
27
IV Brief History of Life Insurance Industry in Japan
Total Assets and Portfolio Yields
400,000
Changes in Total Assets
367,168
350,000
320,691
300,000
250,000
200,000
187,492
191,731
1995
2000
209,879
131,619
150,000
100,000
50,000
0
5,855
12,893
26,258
1970
1975
1980
53,871
1985
1990
Total Assets: 367 Trillion Yen
(%)
2005
2010
2015
Portfolio Yields by Type of Assets
(As of the end of.FY2015)
Tangible Fixed
Assets, 1.70
Others, 8.52
Cash/Deposits
2.38
Financial Loans,
8.71
Policy Loans,
0.82
JGB, 44.15
Foreign
Securities,
21.42
Stocks, 5.40
FY
Bonds
Genera l
Domestic Foreign Financial Real
Account
Stocks Securities Loans Estate
Assets
2011
1.91
1.56
2.91
1.94
2.27
1.92
2012
2.00
0.61
5.25
2.18
2.35
2.36
2013
1.95
5.14
4.60
2.15
2.43
2.40
2014
1.88
5.31
5.50
2.28
2.50
2.58
2015
1.75
5.17
2.24
1.70
2.62
1.92
Corporate
Bonds, 6.91
Source: The Life Insurance Association of Japan
28
IV Brief History of Life Insurance Industry in Japan
Changes in Product Portfolio (the number of new policies)
Endowment
Term
Whole Life
Medical
Annuties
Others
100%
11.38
90%
80%
20.99
1.62
1.23
16.89
1.28
18.64
0.42
1.57
9.80
12.37
0.77
4.30
1.78
0.10
5.13
21.87
35.47
8.61
3.86
1.49
5.51
60%
87.00
77.78
81.81
79.36
13.50
6.98
10.05
21.16
33.30
35.43
27.75
23.02
30%
12.67
47.00
10%
17.73
17.68
1960
1965
1970
1975
1980
1985
1990
9.29
14.52
12.51
9.83
0%
1955
33.78
24.88
24.55
36.64
1950
8.75
31.53
22.45
73.79
20%
11.12
23.00
12.24
83.35
7.97
14.71
10.53
50%
8.95
13.58
12.32
17.69
11.78
14.36
7.70
70%
40%
18.91
13.25
1995
2000
12.63
4.58
2005
2010
12.48
8.98
2015
29
Source: The Life Insurance Association of Japan
IV Brief History of Life Insurance Industry in Japan
Changes in Asset Management Portfolio
Cash/Deposits & Call Loans
Government Bonds
Corporate Bonds
Stocks
Policy Loans
Financial Loans
Tangible Fixed Assets
Others
Foreign Securities
100%
10.00
90%
80%
8.81
6.28
5.46
17.50
35.46
21.20
54.06
14.26
55.48
60.39
11.43
13.07
40%
2.55
28.79
17.21
20%
10%
1.70
8.71
23.55
50%
30%
2.09
12.61
70%
60%
4.26
5.92
0.77
22.69
19.56
1.46
0%
1950
1960
1970
5.42
5.19
1980
5.06
21.42
5.40
7.88
6.91
45.00
44.15
2010
2015
15.37
9.29
21.97
3.99
4.36
1990
20.49
2000
30
Source: The Life Insurance Association of Japan
V Addressing the issues
V Addressing the issues
1. Financial crisis in the 1990s
Changes in economic situation
Impacts on the life insurance industry
Stock Price
45000
-37.7
-200
-107.5
-135.5
-196.0
-286.7 -276.8
-292.5
-400
-600
-1,000
-550.0
-739.8
-806.8
-897.5
-949.3
-800
-952.3
(Note) Total of major 4 companies (Nippon, Dai-ichi, Meiji Yasuda, Sumitomo)
*Loss due to portfolio yield rate fallimg below the expected interest rate
Interest rate (10yr JGB)
(%)
8
40000
7
35000
6
30000
5
4
25000
3
20000
2
15000
1
10000
0
-1
5000
Source: Bank of Japan, Financial Service Agency
32
2016
2014
2012
2010
2008
2006
2004
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2002
-2
0
2000
(Y)
0
1998

200
1996

The amount of both new business and business in force declined
affected by the economic downturn
Lower investment yields caused large negative spread
Financial condition deteriorated due to falling stock prices
 The ratio of stocks in insurers’ portfolios was 22% in 1990
400
1994

505.2
375.
246.3
600
1992

(Y billion)
1990

The Japanese economy maintained favorable growth until 1989
mainly due to the expanding domestic consumption.
However, stock prices and land prices plunged after peaking in 1989.
Maintain low interest rate policy for a long time for monetary
relaxation
1988

1986

Negative spread*
V Addressing the issues
Bankruptcy cases of life insurers
Nissan Life
Toho Life
Daihyaku Life
Taisho Life
Chiyoda Life
Kyoei Life
Tokyo Life
Yamato Life
Procedure
Administrative
Administrative
Administrative
Administrative
Judicial
Judicial
Judicial
Judicial
Excess liabilities
(a)-(b)
Approx. 302.9
Approx .650
Approx. 317.7
Approx. 36.5
Approx. 595
Approx. 689.5
Approx. 73.1
Approx. 64.3
(April 1997)
(June 1999)
(May 2000)
(August 2000)
(October 13, 2000)
(October 23, 2000)
(March 31, 2001)
(October 17, 2008)
Asset (a)
(billion yen)
1,822.7
2,190
1,300
154.5
2,233
3,725
690
194.9
Liability(b)
(billion yen)
2,125.6
2,840
1,617.6
191
2,828
4,414.5
763.2
259.2
Aoba Life
(Prudential Life)
GE Edison Life
(Gibraltar Life)
Manulife Life
Azami Life
(PGF Life)
AIG Star Life
(Gibraltar Life)
Gibraltar Life
T&D Financial Life
Prudential
Financial Japan
Life
Relief Insurance
Company
(PGF Life)
Aid amount by
LIPPCJ (billion yen)
200
366.3
145
26.7
0
0
0
27.8
Changes in Policy
Reduction of
policy reserve
Post-reduction
expected interest
rate
Date of Resolution
No reduction
10%
10%
10%
10%
8%
No reduction
10%
(additional
reduction for
high-interest
policy)
2.75%
1.5%
1.0%
1.0%
1.5%
1.75%
2.6%
1.0%
October 1, 1997
March 1, 2000
Transfer of
contract
Transfer of
contract
April 2, 2001
March 31, 2001
April 3, 2001
Transfer of contract
Transfer of contract
April 20, 2001
Conversion to a
stock company
October 19, 2001
Conversion to a
stock company
(Restart business)
June 1, 2009
Restart business
(Restart business)
Restart business
33
V Addressing the issues
Efforts of Industry
Absorbed impacts of
the Financial Crisis
a) Accumulating Internal Reserves
Internal Reserves (Total of major 4 companies)
＊Internal Reserves： Total Capital + Capital Reserves + Price Fluctuation Reserves
+ Accumulated Fund for Price Fluctuation + Risk Reserves + Contingency Reserves
Yen Trillion
8
7
6
5
4
3
2
1
0
Internal reserves was
accumulated from ¥ 3
trillion to ¥ 7 trillion.
(Note) Revision in Distribution Regulation:
In accordance with the partial amendments to Ordinance for Enforcement of
Insurance Business Act in 2002, the bottom limit of the distribution rate of
surplus to policy dividends was brought down from 80% to 20% in order to
secure adequate internal reserves in 2002.
Source: disclosure of each company
b) Stock Holding
Total assets and stock holding
1990
Total assets
Stocks
2001
Trends in Amount and Ratio of Bonds and Stocks
¥ trillion
(trillion yen)
2015
131.6
184.4
367.1
28.9(21.9%)
24.7 (13.4%)
19.8 (5.4%)
Cutting down
(Excluding JP Insurance)
Source: The Life Insurance Association of Japan
200
180
160
140
120
100
80
60
40
20
0
Bonds
Stocks
Ratio of Bonds to total Assets
Ration of Stocks to total Assets
(%)
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
34
V Addressing the issues
c) Duration of Bonds
Breakdown of JGB by time of maturity
2000
JGB Issuance by duration (Availability of super long-term bonds)
2015
Below 10yr to maturity
88.3%
28.9%
Over 10yr to maturity
11.7%
71.1%
Based upon disclosure of each company
d) Standard interest rate of new sales product
2016-: 0.25%
(expected)
6
1,000,000
1y - 10y
0
(¥ 100million)
more than 10y
e) Reduction of operating expense ratio to total premium income
5
(%)
2001-2012:
1.5%
4
3
1
1y or less
10y
1985-1993:
5.5%
7
2
1,500,000
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
8
auction for enhancedliquidity
500,000
(%)
9
2,000,000
2013-: 1.0%
16.00
14.00
1996-1998:
2.75%
12.00
0
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Standard Interest Rate
18.00
10.00
Portfolio Yield of General Account Assets
f) Accumulation of additional policy reserves
Source: FSA, LIAJ
 In order to ensure further financial soundness and dissolve negative spread, some insurers started to accumulate additional policy reserves
g) Changes in sales products
 Shifted from saving type products (such as whole life insurance & endowment ) to protection type products (such as medical insurance).
35
 Started sales of adjustable interest funding life insurance
V Addressing the issues
2. Aging Population
(1) Population Demographics
Aged 19 or under
(ten thousands)
12,000
8,000
6,000
8,411
309
107
4,150
9,008
9,430
376
164
338
139
4,646
9,921
434
189
0
516
224
Aged 75 or over
Population aging rate (aged 65~ to the total population)
Projected
11,194
284
602
11,706
366
699
12,557 12,693 12,777 12,806 12,660 12,410
12,105 12,361
12,066
471
776
597
892
717
1,109
900
1,301
1,160
1,407
1,407
1,517
1,646
1,749
26.8
1,879
29.1
1,733
2,179
30.3
1,479
23
5,109
5,650
4,000
2,000
10,467
Aged 65-74
Actual
Total Population
(Underlined number)
14,000
10,000
Aged 20-64
6,295
7,056
6,786
9.1
7,353
10.3
7,590
12.1
7,861
7,873
17.4
14.6
11,662
2,278
(%)
37.7
11,212 36.1
33.4 10,728 10,221
2,245
31.6
1,407
1,495
20.2
7,752
7,497
7,089
6,783
6,559
6,278
5,910
2,223
1,645
5,393
2,257
1,600
39.4
38.8
9,708
39.9
45
40
9,193
2,385
2,401
1,383
1,225
35
8,674
30
2,336
25
1,128
20
15
4,978
4,643
4,368
4,105
5.3
5.7
6.3
7.1
7.9
4.9
3,846
3,883
3,781
3,648
3,432
3,517
3,578
3,501
3,249
2,857
2,596
2,409
2,287
2,176
2,015
1,849
1,698
1,562
1,467
1,386
1,297
1,199
1,104
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
10
5
Source : For the figures until 2010, “Population Census”, The Ministry of Internal Affairs and Communications
For the figures from 2015, The result of the medium variant projection under “Population Projection for Japan (as of January 2012)”, National Institute of Population and Social Security Research
(Note) The total population from 1950 to 2010 includes the population of uncertain age.
(2) Population Pyramid
2040
2010
1980
Aged 65 →
M
F
M
F
M
F
Aged 15 →
36
Source : For the figure of 1980, “Population Census”, The Ministry of Internal Affairs and Communications
For the figure of 2010 and 2040, The result of the medium variant projection under “Population Projection for Japan (as of January 2012)”, National Institute of Population and Social Security Research
0
V Addressing the issues
(3) Fertility rate and Number of births
4
3.5
3.65
3.5
5000000
3.6
4500000
4000000
3
Number of births
3000000
2500000
2000000
1500000
1000000
1,071,300
1,190,550
500000
1,003,539
1,062,530
1,187,060
0
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1990
1988
1986
1984
1982
Fertility rate
1992
1221590
1431580
1980
1976
1974
1972
1901440
1970
1966
1962
1960
1958
1956
1954
1952
1950
1.42
1.26
1576890
1823700
1730690
0
1.91
1934240
1606040
1964
0.5
1968
2337510
1.94
1.96
2.13
1.5
2.23
1978
2
1
3500000
2.2
2.5
Completetd Fertility rate
*Completed Fertility rate: Average number of births for a couple married for 15 to 20 years, which is considered as ultimate number of births for a married couple
(4) Number of children
for married couple
(Duration of marriage: 15 to 20 years)
100%
90%
80%
4 or more
70%
3
60%
2
1
0
30.2%
23.8%
50%
40%
57.0%
55.4%
57.8%
56.4%
53.6%
53.2%
22.4%
19.4%
17.8%
56.2%
54.1%
11.7%
15.9%
18.6%
2005
2010
2015
56.0%
30%
20%
10%
11.0%
8.9%
0%
1977
1982
1987
1992
1997
2002
37
Source: Cabinet Office, National Institute of Population and Social Security Research
V Addressing the issues
(5) Average Life Expectancy
95
Male
Female
90
86.39
87.65
88.68
89.55
90.29
90.93
83.55
84.19
2050
2060
84.6
85
81.9
78.76
80
79.64
74.66
75
80.93
81.95
82.82
77.72
75.92
70.19
73.35
Estimated
70
69.31
65
65.32
60
1960
1970
1980
1990
2000
2010
2020
2030
2040
38
Source: Ministry of Health, Labour and Welfare; Ministry of Internal Affairs and Communications
V Addressing the issues
(6) Medical Expenses
(a) Hospitalization Rate by Age Group
(%)
(Days)
(b) Average Days of Hospitalization by Age Group
90
12
80
10
70
60
8
50
6
40
30
4
20
2
10
0
0
(Age)
(Age)
Source: “Patient Survey (2011)”, Ministry of Health, Labour and Welfare
(c) Lifetime Medical Expenses (Estimates in Fiscal 2009)
(ten thousand yen)
350
300
Under 70
50%
Lifetime Medical Expenses
Y23.00 million
250
256
204
200
150
100
286
70 or over
50%
266
200
165
104
57
50
41
34
36
46
54
59
67
82
103
131
107
40
9
0
(Age)
0-4
5-9
10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 10039
Source: Ministry of Health, Labour and Welfare
V Addressing the issues
(7) Long-Term Care Expenses
(a) Period of Unhealthy Condition = Average Life Expectancy at Birth – Healthy Life Expectancy
(Years)
Male
Female
Average period of a Average period of a
life WITH physical
life WITHOUT
limitations
physical limitations
Year
2010
70.4
Average life
expectancy
9.2
Average period of a Average period of a
life WITH physical
life WITHOUT
limitations
physical limitations
79.6
73.6
Average life
expectancy
12.8
86.4
Source: Ministry of Health, Labour and Welfare
(b) Certification Rate of Needed Long-Term Care in 2011 By Age Group
Population
(ten thousand)
Number of People Certified
(%)
Certification Rate
900
100
786
800
90
718
700
80
74.5
614
70
600
60
500
449
49.1
50
400
40
300
200
30
263
28.4
145
13.6
100
(Age)
65-69
20
108
10
43
23
0
84
6
2.9
128
129
0
70-74
75-79
80-84
85-89
90-
40
Source: “Survey of Long-Term Care Benefit Expenditures”, Ministry of Health, Labour and Welfare; Ministry of Internal Affairs and Communications
V Addressing the issues
(8) Employment and Asset Holdings of the Elderly
(a) Labour Force Participation Rate of the Elderly
Proportion of elderly employees to population by age group
60-64(Male)
(%)
65-69(Male)
60-64(Female)
65-69(Female)
100
90
80
70
64.7
65.4
65.9
67.1
45.0
45.7
72.5
71.4
70.6
70.8
71.3
46.9
47.8
46.9
46.8
46.3
46.9
48.8
50.5
42.5
44.2
44.2
44.5
46.0
47.6
41.0
42.9
25.5
26.3
26.9
27.1
27.8
29.3
30.5
2008
2009
2010
2011
2012
2013
2014
72.2
60
50
44.4
43.8
40
30
20
37.5
38.4
39.0
39.0
74.3
70.8
23.3
23.8
23.7
24.6
25.6
2003
2004
2005
2006
2007
10
0
Source: “Labour Force Survey”, Ministry of Internal Affairs and Communications
• Note that about 40% of unemployed elderly men are willing to work.
41
V Addressing the issues
(b) Assets of the Elderly
Amounts of Savings and Yearly income per Household by Age Group of Household Head
(million yen)
30
The Elderly
Savings(million yen)
25
24.82
24.14
Yearly income(million yen)
20
17.82
15
10.45
10
4.89
5
6.89 6.17
7.41
30～39
40～49
8.13
5.7
4.54
2.51
0
(Age)
～29
50～59
60～69
70～
Source: “Family Income and Expenditure Survey (2013)”, Ministry of Internal Affairs and Communications
42
V Addressing the issues
(9) Proposal of establishment of the Longevity Pension
Relationship between the Longevity Pension and existing system
Formation of assets for wealthier life
or revenue between retirement and
pensionable age
Business Income,
Employment Income
etc
Terminable
annuity
＋
Longevity Pension
Other asset
formation
products
＋
Ensuring lifelong fixed income in
combination with public pension
Promoting spread through
political support such as subsidies
Public Pension
(retirement)
Related
topics for
discussion
Extension of
mandatory
retirement age
(pensionable age)
(death)
-Raising of the medical and long-term care
copayment
-Raising the benefit age of public pension
43
VI The Life Insurance Association of
Japan
VI The Life Insurance Association of Japan
<Overview of LIAJ>
Name
The Life Insurance Association of Japan (LIAJ)
Foundation
The LIAJ was incorporated on 7 December 1908
Member
Company
41 Companies （as of October 2016)
The LIAJ consists of all life insurance companies which are licensed under the
Insurance Business Law. (Enrollment is not obligated by the law.)
Board
Member
Representatives of life insurance companies and the association’s full-time
executives
Number of
offices
53 offices
The main office in Tokyo and 52 branch offices in all the prefectures.
Purpose
To promote the sound development of the life insurance industry in Japan, to
maintain its liability, and thereby to contribute to improving quality of national
life.
Main
Activities
・Representing the opinions of life insurance industry
・Conducting research and taking statistics
・Development of voluntary guidelines
・Education
・Public relations
・Social contribution
・Consultation and Alternative Dispute Resolution
・Operating Life Insurance Network Center
45
46
VI The Life Insurance Association of Japan
<History>
Year
Item
1898
The Forum of Japanese Life Insurers was founded.
1905
The Forum of Japanese Life Insurers was reorganized into the Association of Japanese
Life Insurers.
1908
The Association of Japanese Life Insurers was authorized as an incorporated association.
1942
The Life Insurance Control Association was founded. The Association of Japanese Life
Insurers was renamed the Life Insurance Network, and most of its operations were
transferred to the Life Insurance Control Association.
1945
The Life Insurance Council of Japan was founded to take over the operations of the
Control Association after it was dissolved. The Life Insurance Network was renamed the
Life Insurance Association of Japan (LIAJ). All the operations of the Life Insurance
Network were transferred to the LIAJ.
2008
The LIAJ marked the 100th anniversary since its foundation.
2014
The LIAJ made a transition from an incorporated association to a general incorporated
association.
47
VI The Life Insurance Association of Japan
Organization Chart:
General Meeting
Auditors
Board of Directors
Committees
Association Secretariat
 General Affairs Dept.
Local Committees
 Public Relations Dept.
 Administration & Education Dept.
 Planning Dept.
 Research Dept.
 Joint System Office
 Life Insurance Consultation Office
 International Dept.
 Local Offices (53 Districts)
Life Insurance
Consultation
Center
Arbitration
Advisory
Committee
Arbitration
Council
VI The Life Insurance Association of Japan
<Organization of Association>
There are seven committees under the Board of Directors because the wide range of technical issues
including solicitation and conclusion of insurance contract, maintenance and insurance payment, asset
management and accounting are required to be discussed. Each committee is looking into its technical
issues.
The committees consist of representative from all member companies since the committees deal with
the issues related to the entire industry.
Current Issue
Committee
Agency Management &
Educational Committee
Working Committee
on Planning
Working Committee on
Agency Management
Working Committee
on Legal Affairs
Working Committee on
Education
Working Committee
on General Affairs
Working Committee
on PR
Accounting
Committee
Working Committee
on Accounting
Actuarial Working
Committee
Operation Management
Committee
Financial Management
Committee
Working Committee on
Financial Management
Group Pension and
Insurance Committee
Working Committee on
Group Pension Insurance
Information
Systems Committee
Working Committee on
Information Systems
Working Committee on
Group Insurance
Working Committee on
insurance for supporter of
M&PHD
Working Committee on
Underwriting
Working Committee on
Contract Maintenance
Working Committee on
Insurance Payout
Working Committee on
Medical Affairs
48
VI The Life Insurance Association of Japan
<Life Insurance Consultation Center>
The LIAJ was designated by the FSA as a designated dispute resolution body based on the Insurance Business Act, and
therefore handles complaints and resolves disputes related to life insurance business and foreign life insurance business.
In order to conduct those activities, the Life Insurance Consultation Center was established within the LIAJ. The Center and
its offices provide consultation and receive inquiries or complaints from policyholders or consumers.
*Financial ADR system: Alternative conflict resolution procedures in financial sectors. The competent authority shall appoint the
dispute resolution organization based on the law (came into force in October 2010)
Appropriate Handling of Inquiries and Complaints
In the Life Insurance Consultation Center, expert consultants deal with inquiries and complaints from a neutral position.
When the Center receives a request to resolve a complaint, it strives to reach an early settlement such as by making requests
for a settlement and by mediating settlements with the life insurers involved.
<Number of inquiries and complaints>
(FY)
25,000
20,000
6,898
8,908
15,000
10,148
7,616
7,076
10,000
5,000
14,256
11,110
9,989
10,100
2007
2008
6,623
8,156
7,844
2009
2010
6,458
5,697
9,593
5,463
5,186
4,724
7,437
6,083
6,067
6,064
2012
2013
2014
2015
0
2005
2006
General Inquiries
2011
Compaints
49
50
VI The Life Insurance Association of Japan
<Operation of Arbitration Council>
When a customer files a complaint with the Center, the Center arranges the negotiation between the life insurer involved
and the customer to reach a settlement. In principle, if they cannot reach a settlement within one month, the Center
convenes the Arbitration Council to resolve the dispute. The Arbitration Council consists of 15 members (6 lawyers, 6
consumer advisors and 3 staffs of the Life Insurance Consultation Center) and strives to achieve an appropriate resolution of
the dispute.
Filing of Complaint
Receive complaint
Dispute unresolved
Arrange
negotiation
Settlement reached
Settlement reached
Fact-finding
through
documents,
hearings, etc.
Judging of
appropriateness
Deliberation
Preparation/
presentation
of settlement
proposal
Arbitration
unsuccessful
Arbitration Council
Arbitration completed
by ruling
Refusal
<Number of Filings for Procedures of the Arbitration Council>
FY
2009
2010
2011
2012
2013
2014
2015
Number
122
172
260
208
202
194
312