The Latest News in Japan’s Life Insurance Market 2019:
Why the Group Management? -Nippon Life’s four-company structure andDai-ichi Life’s three-company structure.
Launching Hanasaku Life Insurance Company for Insurance Shop Channel.
Hanasaku Life Insurance Company is a life insurance company just established in April
2019. Hanasaku means to bloom in Japanese. Hanasaku Life was named in the hope thatthe company would help flowers bloom in each customer’s life by planting and nurturing
new seeds of products and services for him/her.
Hanasaku Life is in fact a wholly owned subsidiary of Nippon Life Insurance Company.
The company is strategically established to play a central role to provide products promptly
and properly to the independent agency market such as insurance shops that are expanding
their presence in a comparative recommendation sales channel, and Hanasaku Life also takes
a part in Nippon Life’s channel strategy.
In June, the first product, Hanasaku Iryo (Whole life medical insurance) was released.
Started with medical insurance that is the most competitive products within the insurance
shop channel, Hanasaku Life plans to release a few more products for FY2019. The company
sets a goal high at selling 100,000 policies and partnering up with more than 3000 agencies
by the second year, FY2020. Hanasaku Life aims for a certain level of presence in theinsurance shop channel.
A small life insurance company which also has just been established enters to the fiercest
market like medical insurance from the start and aims for a certain presence is not something
every company can do. It is none other than the credibility of the Nippon Life Group, andHanasaku Life makes full use of it.
Centered around Nippon Life, the Nippon Life Group has a four-company structure inJapan with Taiju Life Insurance Company, Nippon Wealth Life Insurance Company andHanasaku Life.
What kind of insurance companies are Taiju Life and Nippon Wealth Life, then?
Nippon Life acquired Mitsui Life Insurance Company at JPY 280 billion and made it awholly owned subsidiary in March 2016. Three years later, Mitsui Life changed its name toTaiju Life in April 2019.
At the press conference in September 2015, Nippon Life pointed out three reasons to havechosen Mitsui Life as a partner.
① Sharing the same philosophy, strategy and vision;

② Mitsui brand having a strong domestic customer base; and③ Flexible product supply infrastructure.
Nippon Life also emphasized the construction of a system of a strategic complementarity
to increase profitability as a group and at the same time the establishment of a solid No. 1
presence in Japan.
To answer the concerns that since the both companies have the same face-to face-businessmodel of sales agents, both Nippon Life’s and Mitsui Life’s agents might have undesirable
encounters to become against each other toward the same client in the field, Nippon Life said
“There are still many prospective customers out there Nippon Life cannot approach yet. Weadopt indeed the same business model; however, our product line-ups have different
characteristics. Nippon Life’s main products are characterized by protection-type while
Mitsui Life specializes in non-dividend and foreign currency denominated products. In thesense that each customer has different needs, it will be extremely rare cases that such
undesired encounters happen between our agents.”
On the other hand, Nippon Wealth Life’s predecessor is MassMutual Life Insurance
Company. In May 2018, Nippon Life acquired 85% of the issued and outstanding shares ofMassMutual Life from US’s MassMutual International LLC (MMI) at JPY 104 billion andmade MassMutual Life a subsidiary.
This acquisition was aimed at raising the low bancassurance share of Nippon Life. Mass
Mutual Life has expanded into a bancassurance channel in Japan since 2004, targeting thewealthy class and has improved its performance through major securities firms andmegabanks as its main channel. The company changes its name from MassMutual to Nippon
Wealth on January 1, 2019.
As to the transaction of mutual supply of products, the product supply between Nippon
Life and Taiju Life is as follows.
January 2017: Nissay1 Teizou Teikihoken (Increasing term life insurance), provided byNippon Life to Taiju Life
October 2017: Dream Road, a foreign currency denominated single premium endowed life
insurance, provided by Taiju Life to Nippon Life
July 2018: Nissay Gakushihoken (Educational endowment insurance), provided by Nippon
Life to Taiju LifeThe business results exceeded the sales target plan because the agents of each company
sold the products.
Moreover, Nippon Life's wholesalers have started sales support services for the Nenkin1

Nippon Life Insurance Company is also known as Nissay.

(Annuity) Shinjidai (New age), released by Nippon Wealth Life in April 2019. Nippon
Wealth Life also committed to the sales through not only major securities firms andmegabanks but also regional financial institutions including local banks, credit unions, etc.
So what are the results?
According to the financial results for FY2018, the insurance premium income of the groupincreased by 11.9% from the previous year to JPY 6069.2 billion, which is a double-digit
growth. For these successes, the Nippon Life Group gives credit to the strong sales ofbancassurance, the group-wide effort to the insurance sales through the mutual supply of theproducts, and the reflection of Nippon Wealth Life’s financial result to the consolidatedaccounts.
Mutual supplies of products producing results
There is Dai-ichi Life Insurance Company as a precedent case of group management in thedomestic market.
Since FY2017, the company has launched a three-company structure in Japan and has
developed the multi-brand/multi-channel strategy that includes mutual supply of products.
Each company’s main channel(s) is(are) as follows.
Dai-ichi Life Insurance: Agents and Independent Agencies (Visiting type)Dai-ichi Frontier Life Insurance: Bancassurance
Neo First Life Insurance: Insurance Shop and Bancassurance
In the implementation of the mutual supply of products, by selling products of Dai-ichi
Frontier Life and Neo First Life through Daiichi Life's agent channel, Dai-ichi Life's
annualized new business premiums increased by 10.6% (FY2018 financial results).
The positive effect was also evident in the business results of Dai-ichi Frontier Life. In thefirst half of FY2018, the premium and other income increased by 43% to JPY914.1 billion.
The contributing factors of this are the increase in the number of regional banks handlingDai-ichi Frontier’s products and the full-blown sales through the agent channel. The sales
through the agent channel stood at JPY159.5 billion, accounting for 17% of JPY914.1 billion.
There are certain conditions apply to the agents to be able to handle Dai-ichi FrontierLife’s products. Some of them include that the agents have to be at least on their second year
working at Dai-ichi Life, have to take a certain level of internal education and training, andalso pass the internal exam. In many cases, the agents utilize products from the First Frontier
as additional proposals for inheritance tax measures and savings needs.
Furthermore, the premium and other income from the products of Dai-ichi Frontier Lifeand Neo First Life through the agent channel for the first half of FY2018 was JPY212.2

billion. This is four times that of the same period of the previous year, which was JPY54.3billion.
In addition, Neo First Life started to sell its products online in August this year. There havebeen an online premium estimation tool and online document request tool so far, and yet anonline application tool was added to the functions.
Dai-ichi Life Group is confident as “While each of the three companies develops highly
competitive products and the whole group makes endeavors to enhance and diversify sales
channels, we provide products and services through the optimal channels that meet thecustomer needs.”
Raising the level of management quality
So far, we have looked at the group management of Nippon Life and Dai-ichi Life. Let'ssummarize its background and significance.
First of all, there are the changes on the consumer side. Consumer behaviors on purchasing
insurance become diversified and consumers show active behavior toward the insurance
purchase more than ever. Because of that, sales channels, through which consumers purchaseinsurance, take a shift from the ever-so-dominant traditional sales agents and expand tofinancial institutions, insurance shops, and the Internet.
Suppose that this trend further advances; the flexibility to respond to the need fordiversified channels will be extremely important.
For example, it is typical that each company receives two or three approvals for the newproducts each year. Since the new products can be a big trigger for sales activities, if you
have a couple of new products a year, with a simple calculation, you can create opportunities
to visit customers every six months. It can be also said that if there is the total of six new
products with the three group companies, the touchpoints with prospective customers andexisting policyholders will be tripled.
In other words, rather than dealing with the market with a single insurance company, witha group consisted of multiple insurance companies has more capabilities to enhance a productlineups and services, leading to improve cross-supply functions of products.
There is another merit brought by the cross-supply functions within the group: deduction in
the product development costs.
In addition, by adopting a multi-channel strategy to a group, it enables the group to accessthe market unique to each channel and to expand the market as a whole.
The business result of each channel has its own ups and downs by changes in economic
and market environments; however, even if a bancassurance channel is sluggish, if an agent

channel or insurance shop channel is strong, the business results of the group as a whole canbe improved. This contributes to the management stabilization.
Moreover, the best practice for the customer centered operation, risk management orcompliance can be shared among the group companies. By sharing it, it would lead to theimprovement of various business operations, and raise the level of overall management
quality.
The group management by major life insurance companies in Japan’s market has barely
started. During the financial results briefing for FY2018, Nippon Life stated “It is very hardto say what the total value of the consolidated financial results means, but each company has
strengths and aims to provide insurance as a group by complementing each other.”
It is interesting to see in the future that what kind of “group value” will be created, how a
growth path will be drawn and a firm position will be built in the shrinking domestic life
insurance market due to the population decline.

About the writer:

Kenichi Suzuki is an insurance journalist working for a major insurance trade paper for 34years.

From 2000 onward, he covers a wide range of insurance news including on-line life

insurers, insurance shops, overseas expansion of Japanese major life insurers, businessstrategies, Insurance Council, InsurTech, to name a few. He hosts a private study group,Insurance Marketing Study Group. He occasionally takes a role of a speaker for OLIS
seminars and has previously lectured at OLIS overseas seminars in Taipei, Seoul, Beijing,
Bangkok and Jakarta.