Business of Foreign Life Insurance in Japan--- Series 3: Adapting to Postwar Regulatory Changes ---Foreign business in Japan was highly regulated during a 20-year period
following the end of the Second World War according to the Foreign Exchangeand Foreign Trade Control Law, which had been put in force in December 1949.
As for foreign insurance business, the Act on Foreign Insurance Business
Operators was implemented in June 1949. Foreign insurers were required toobtain a license of the Minister of Finance in order to carry out business inJapan pursuant to Article 3, paragraph (1) of the Act.
By the end of 1960s, there were at least eight foreign life insurancecompanies operating business in Japan1. However, those companies were only
approved to sell life insurance to foreign residents in Japan who mostly
consisted of the people living in US military bases. In other words, only
dollar-based business was allowed at the time. Moreover, most of thesecompanies ran their business via agencies except American Life Insurance
Company which had set up a branch office in Tokyo.
In 1964, the government gradually started deregulations of foreign directinvestment when Japan became member of the OECD, which required theliberalization of restrictions on inward direct investment in a broad range ofindustries according to the OECD Code on Liberalization of Capital Movements.
The insurance industry became one of the designated industries forliberalization in March 1969. Accordingly, foreign ownership of up to 50% wasautomatically approved. Foreign ownership of up to 100% became automaticallyapproved from May 1971 onwards.
In its meeting held on 20 June 1972, the Insurance Council, an advisoryorgan of the Minister of Finance established in April 1959, proposed to allow
foreign companies to operate business in Japan if their products were notcompeting with domestic companies at the time. Such products included
No.1 United States Life Insurance Company in New York: obtained the license in March 1951and dissolved in June 1982. No.2 Pioneer American Insurance Company: obtained the license in
July 1952. No.3 World Service Life Insurance Company: obtained the license in 1953. No.4
American Life Insurance Company: obtained the license in September 1954. No.5 Transamerica
Occidental Life Insurance Company: obtained the license in January 1955 and dissolved inOctober 2008. No.6 American Amicable Life Insurance Company: obtained the license in 1957
and dissolved in Jan 1992. No.7 United Benefit Life Insurance Company: obtained the license inJune 1964 and later changed its name to United of Omaha Life Insurance Company. No.8
Midland National Life Insurance Company: obtained the license in October 1964.
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nonparticipating insurance or whole
life insurance, term insurance or healthinsurance 2 . Six months after thismeeting, American Life, became thefirst foreign life insurance company toobtain the license for selling products
to Japanese citizens as a yen-basedbusiness.
The appearance of fast-food in Japan: thefirst hamburger store opened in 1972
Ginza.

In the 1970s, two more foreigncompanies obtained the license as well,namely American Family and Seibu

Allstate Life in Oct 1974 and January 1976 respectively. In the 1980s, there
were seven more foreign life insurance companies obtained licenses, namely
Sony Prudential Life and Combined Life in February and December 1981
respectively, INA (Life Insurance Company of North America) in February 1982,
Omaha Life in October 1985, Nationale Nederlanden Life and Equitable Life ofAmerica in March and October1986 respectively, Prudential Lifein February 1988.
The

fundamental

differencesamong the companies mentioned
above refer to the legal grounds onwhich the license was granted andthe way they engaged in sales
activities. Firstly, the licenses for
Seibu Allstate Life, Sony Prudential
Life,

INA,Equitable

Life“Create a new life insurance today with our life
planners’ assistance.” (An Opening Ad)

andPrudential Life were granted on the grounds of the Insurance Business Act,
while the other companies received licenses on the grounds of the Act on
Foreign Insurance Business Operators. Secondly, INA and Equitable Life andPrudential Life were approved as affiliated companies while Seibu Allstate Life
was as a joint venture company. The other companies were registered as abranch office. Furthermore, in regards to the strategies of product anddistribution channels, the foreign life insurers were quite distinct from theRegarding the health insurance, only a few middle and small sized companies were allowed tosell at the time. Moreover, the major products of domestic companies were participatinginsurance.
22domestic life insurers. This topic will be discussed in more detail in the next
article.

To be continued…
YingYing Jiang, Ph.D.

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