Product Transitions in Japanese Life Insurance Market— Series 4: Stable Economic Growth Period —Japan’s economy entered a stable growth period after experienced its firsttime negative growth in 1974 which can be largely attributed to the oil crisis
occurred in 1973. Consumer price increases had
been drastically accelerated in the midst of theeconomic recession caused by the oil crisis. Under
such circumstances, a possibility of decrease in thevalue of the existing insurance policy graduallybecame a fast-growing concern, and the needs forlarger amount of insurance coverage increased
significantly as well.
Products
consequentlywithabecame

large
theamountof

mainstream

coverageoflife

insurance industry in the 1970s. This tendency isparticularly prominent in death benefit insurance
probably because the national pension system had
been playing a greater role in providing living benefit
during this period.
Concretely, corresponding to the improvement of

Sugar Release by MAFF of
Japan during the Period of
Rampant Inflation Causedby the First Oil Crisis.
(Source: Showa History,Vol.5, p.162.)

living standards associated with the economic development, a raise in themonthly amount of public pension benefit had been successively implemented
in 1964, 1969 and 1973, namely from ¥10 thousand to ¥20 thousand and thento ¥50 thousand. Moreover, a price-index linking system for pension benefit wasintroduced in 1973 under which the amount of pension benefit will be raised in
response to wage and price growth. It is notable that there was no rise inpremium payments accompanying with the above reforms regarding pension
benefit. The year 1973 was therefore called Welfare Society Year in the light ofthese remarkable improvements on pension benefits.
On the other hand, giving the further development of nuclear families
securing family’s financial future had undoubtedly become increasingly

1

associated with urbanization and economic growth, a death benefit in pursuit ofimportant. In addition to term riders, various
types of whole life insurance policies and termlife insurance policies had been developed inorder to meet the demand for death benefit.
The notable point is that the market of termlife insurance began to grow steadily overall
especially in commercial lines, unlike theprewar

periodduringwhichitssales

performance was poor. For instance, key-man
insurance was one of the most popular termlife insurance products in the 1970s designed

A Brochure of A ProductRepresenting the Start of theLarge-amount Coverage Era,
Diamond Insurance by Meiji
Life in June 1969.
(Source: 110 Years of History ofMeiji Life, p.163.)

for the managers of small and medium-sizedcompanies. In particular, a type of key-man
insurance with a ¥100 million sum insured
developed by Daido Life, one medium-sized

insurance company, had gained a lot of popularity.
However, the types of endowment life insurance
were still the industry leading products despite thefact that the shift to the types of whole life
insurance

hadalreadyoccurred

insomecompanies in the late 1970s. The shift of industry
leading product to the types of whole life insurance
eventually was accomplished by the mid-1980s.
Meanwhile,thederegulationoffinancial

markets such as phased liberalization of interest
rate had exerted significant influence on life
insurance industry in the 1980s. A wide variety of(Source: 110 Years of History ofMeiji Life, p.185.)

financial

products

progressofadvancement

accompanying

financialoffinancialwith

thederegulation

andtechnology

hademerged. This had been bringing consumers
moreoptions

tomanage

theirrisks

andconsequently led to life insurance companies

2A Special Product Designed forFemale Customers, Dream Plan by
Meiji Life in August 1975
Representing An Example of theMarket Segmentation Strategies in1970s.

being exposed to stiff competitive pressure from other financial institutions.
To respond to the above environmental changes, life insurance companies
conducted an active sales promotion of a five-year term single-payment type ofendowment insurance product in which the assumed interest rate had been set
at a relative higher level than the products
provided by other financial institutions.
Moreover, a revolutionary new product,
variable insurance, in which policy value islinked with the investment performance ofinsurance company, was introduced. As amatter of fact, the former product emergedin the late 1970s and gained tremendous
popularity from the mid-1980s, whereas
the introduction of the latter product had
A Brochure of A Group Term Life
Insurance Combining A Maximum of50-million-yen Death Benefit with A
Maximum of 10-million-yen Savings
Benefit, One of the Representative
ProductsintheLarge-amount
Coverage Era by Daido Life in April
1971.
(Source: Daido Life- 100 Years of
Challenge and Creation, p.53.)

been discussed since early 1970s andfinally realized in October 1986.
The rapid growth of these two types ofproductimplies

thatsavings

andinvestment functions of life insurance had
become more emphasized during the 1980s.
Furthermore, the changes in taxation policy

regarding payments of individual annuity insurance and term single-payment
endowment insurance had also largely affected the growth of these producttypes which we will discuss more details in our next report.

To be continued…

3(YingYing Jiang, Ph.D. in Commerce of Hitotsubashi University)