Life Insurance Distribution Systems in Japanese Market--- Series 2: Post-World War II Period ---A severe economic crisis hit Japan following the end of the Second World War.
Many insurance policies either lapsed or were cancelled by the policyholders
because they cannot afford the premium payment anymore. Meanwhile, thedemand for life insurance also significantly decreased. In addition to suchcircumstances, the vast amount of insurance payment and the loss of overseas
investment assets due to the war caused serious financial difficulties to many life
insurance companies.
Under these circumstances, the government released a policy to reconstruct theinsurance industry. Namely, insurance payment over a certain amount can bedeferred, and insurance company can restart its business as a new company with
an approval by the government. As a result, all stock life insurance companies
except one small-sized company, Itadani Life, carried out a mutualization by March
1948 and then resumed their business, while the latter company restarted its
business as a new stock company named
Heiwa Life.
Moreover, the government imposed strict
regulations on the insurance business
operation such as the price setting andpolicy dividend allocation, which meansthat neither a low-premium policy nor ahigh-dividend policy would be allowed. In
other words, insurance company cannot
compete with each other in price. On theother hand, there was more demand for a low

Premiums Collection
Source: 100 Years of History of NISSAY, p.192.

premium policy in the market, which can also
be evidenced by the growth of the postal insurance business.
In response to these changes in the business environment, life insurancecompanies conducted strategic changes in their product policy and distribution
system as well. Firstly, they started to pay more attention on the sales of themonthly installment policy which had been launched during the prewar period
though did not sell well. In fact, this type of product soon became popular and its
market share grew to about 60 per cent by the late 1950s. Considering the Japanese
1ⓒ JIANGhousehold financial conditions at the time, probably this type of product had closely
matched with the consumer needs. However, more sales of this type of policy meansthat the company would needmore manpower to collect thepremiums due to its monthly
premium payment system.
As mentioned in our previous
report, the premiums collection
was mostly conducted by theagencies of insurance company
during the prewar period except
theFemale Sales Agents of Dai-ichi Life
Source: The Dai-ichi Mutual Life Insurance Company -- 100 Yearsof History, pp.60-61.

Dai-ichiLife,andits

commission was set at 3 to 5 percent of premium collected. In

addition, most of premiums payment during the prewar period was on a six-monthor one-year basis and most of the policies were with a relatively large amount ofpremium. Furthermore, there were some agencies who became unable to continue
the insurance business after the war due to personal reasons. Based on thesepoints, most insurance companies began to reconstruct their distribution channels,
namely to develop a part-time sales agent system.
At first, many companies recruited some part-time agents only to take charge ofpremiums collection. And in the beginning, thesepart-time agents were comprised mainly of war
widows.

Unsurprisingly,

thisjobwasvery

attractive to these women because they had tomake some money to support their family without
a good education background or any special skill.
However, there were also many non-widow agents
who simply wanted to earn a supplementary
income.
Soon after the sales of monthly installment
policy continually increased, some insurancecompany started to request their part-time agents
to take charge of insurance solicitation business
as

well

which

wasso-called

debit

systemRecruit Advertisement for Debit
Sales Agent by Nippon Life
Source: 100 Years of History of NISSAY,
p.193.

promoted by Prudential Life at the time. This2ⓒ JIANGdebit system was first introduced by Meiji Life in 1951 and employed by most of
domestic life insurance companies by the end of 1950s.
The sales agents in the debit system were mainly composed of female members.
This probably was resulted from its compensation structure which was constitutedof a fixed payment and an incentive payment, and the latter accounted for themajority of the compensation. Thus it might be very difficult for a man to support
his family by taking a sales agent job which hardly brings him a stable income. Infact, there were plenty of jobs with a fixed monthly salary or even a higher salary
since Japan entered the period of rapid economic growth in the late 1950s.
To be continued…
(YingYing Jiang, Ph.D. in Commerce of Hitotsubashi University )3ⓒ JIANG