The Latest News in Japan’s Life Insurance Market 2019:
The Next-Generation Medical Insurance
1. Japan’s first insurance to cover the medicinal therapy, Okusuri (Medicine) Hoken(Insurance)

A next-generation-type of medical insurance has been drawing increasing attention.
The reasons behind this are the shortening of hospitalization period and the increase inoutpatient treatment. The area which cannot be insured with the conventional medicalinsurance, which mainly covers hospitalization and surgeries, is expanding.
For example, let’s divide one’s health condition into three phases.
①Healthy Phase–Prevention of illness or early detection of illness to prevent progression.
②Sick Phase–Supporting medical treatment as a main function of insurance.
③Post-illness (or Recovering) Phase–Supporting rehabilitations, for example, to regain thehealthy life.
The conventional medical insurance can provide the coverage for the phase ②Sick but
both of the phases ①Healthy and ③Post-illness have been long neglected and almost nocoverage has been developed so far in those areas.
In addition, the increased prevalence of lifestyle-related illness has become a publicconcern and Japanese national and local governments have been promoting the measures
focusing on prevention of onset and progression of lifestyle-related diseases.
How do insurers should respond to the shift from hospitalization to outpatient treatment
and the prevention of onset and progression of the ever increasing lifestyle-related illness,then? The key is in “the next-generation-type medical insurance.” Life insurance companies
now compete against each other, developing new products to acquire a new market.
In the midst of such situation, the first medical insurance in Japan to cover the treatmentwith drugs on outpatient basis has been released. Medicare Life Insurance Co., Ltd.
announced its launch of a new product which supports the prevention of progression ofillness Okusuri Hoken, Medifit EX, which is the formal product name, on May 13.
Medifit EX covers the medicinal treatment for nine diseases: those classified as the threemajor diseases, cancer, heart disease and cerebrovascular disease, artery and vein disease(economy class syndrome), kidney disease (nephritis), liver disease (hepatitis B), pancreaticdisease (pancreatitis), diabetes and dyslipidemia.
The total number of patients with those nine diseases reached 10 million according to
Summery of 2014 Patient Survey conducted by Ministry of Health, Labour and Welfare. By
disease, diabetes with 3.16 million people, dyslipidemia with 2.06 million people, heartdisease with 1.72 million people, cancer with 1.63 million people and cerebrovascular disease
with 1.17 million people are high in ranks.
How about the average monthly medication cost borne by patients?
With the calculations of Medicare Life based on JMDC receipt data of November 2017,
patients are responsible for JPY64, 147 for cancer treatment, JPY22, 442 for heart disease
treatment, JPY16, 819 for cerebrovascular diseases treatment, and JPY22, 784 for diabetes
treatment on an average.
Drug prices for those nine diseases covered by Medifit EX are said to have high prices andpatients’ economic burden will be heavy over a long period of time, according to Medicare
Life.
There are more than 1, 400 drugs covered by Medifit EX. Even a new drug is placed on themarket in future; it will be covered by the insurance if it falls under the requirements set forthby Medicare Life such as the new drug “has the same effect as existing drugs.”
How those drugs have been chosen to be covered, then?
The key drugs for preventing the progression of illness are basically guaranteed to becovered. There are cases, however, in which multiple drugs are prescribed for one disease.
For example, for cancer patients, a type of drugs such as a painkiller and anti-nausea may beprescribed but only anti-cancer drugs including hormone drugs will be covered.
Submission of a medical certificate is required upon initial claim filing. With the medicalcertificate, Medicare Life can confirm that whether or not the drug is prescribed for treating
those nine diseases the insurance would cover. Once the confirmation is made, benefits will
be paid simply by submitting a prescription receipt.
In the case of “9 disease basic plan” (anti-cancer drug treatment up to JPY100, 000 amonth, specific treatment with drugs up to JPY50, 000 a month, total payment up to 120
times type, unlimited payment for anti-cancer drug treatment), monthly premiums for
40-year-old male and 40-year-old female are JPY4, 900 and JPY 4, 260 respectively.
Medicare Life is a wholly owned subsidiary of Sumitomo Life Insurance Company andestablished in April 2010. The total number of policies in force reached 700, 000 in February
2019, that is in 8 years and 10 months from the establishment. The target sales goal for
Okusuri Hoken is set as 30, 000 policies for the first year and it is sold through insurance
shop and bancassurance channels.

2. Premium discount according to a result of health promotion activities

As a next-generation medical insurance, health-promotion-type insurance which supports
health promotion is also drawing attention. The following products have been already placedon the market in Japan.
・Aruku (Walk) Hoken (Insurance) with health promotion rider,
Insurance Co., Ltd.

Tokio Marine Anshin Life

(Released in August 2017)

・Linkx: (pronounce as link cross) Protection for you and your family with health challengesystem, Sompo Japan Nipponkoa Himawari Life Insurance, Inc. (Released in April 2018)
・Vitality, Sumitomo Life Insurance Company (Released in July 2018)
・Just with health check-up discount, Dai-ichi Life Insurance Company Ltd. (Released inMarch 2018)
・Best Style with cashback rebate, Meiji Yasuda Life Insurance Company (Released in April2019)
Vitality is a wellness program developed by a South African company, Discovery in 1997
and in Japan, Sumitomo Life has the exclusive agreement with Discovery for its sales.
To join the program, a health promotion multiplier rider should be applied to the existing
insurance policy. Assumed that a participant will engage in health promotion activities, a 15%
discount on insurance premium is offered upfront, at the time of policy inception.
Moreover, a participant’s status, Blue, Bronze, Silver or Gold, is to be determined based on
the accumulative points earned through his/her health promotion activities in a year. The
higher the status is the more the discount on premiums and the rewards (benefits) provided bypartner companies. The maximum discount rate on insurance premium is said to be 30%.

Since the risk assessment based on such behavioral characteristic data and the pricing to set
a discount rate on premiums likewise are something breaking the mold of insurance to date, it
is highly interested within the life insurance industry.
Sales target for Vitality is 5 million policies in 10 years. The sales achieved 100, 000
policies in 3 month after its launch in July last year; however, the accumulative sales stoodonly at 200, 000 policies as of the end of March 2019.
At the time of the first half of FY2018 report in November last year, Sumitomo Lifementioned that although a wide range of age groups has joined the Vitality program, at thetime of the product launch, the number of new business from the young people in their 20s
and 30s increased significantly. As the young generation would be Sumitomo Life’s main
customer base over a long period of time, with a lot of new business with those young people,
the company was confident that it made a very good start. Sumitomo Life further stated thatthe company was enthusiastic to play a new role of reducing the risk itself through promoting
healthy habits, in addition to the role of preparing for the risk, the same as always.

On the other hand, Dai-ichi Life’s Just has been recording strong sales in numbers. Morethan 1 million policies are sold in one year after the release.
Just is a type of insurance which allows policyholders to combine necessary coverages
among 17 areas of protection such as death, three major diseases, nursing care, and medicalcare, and Health Check-up Discount rider is available only for the products covering a deathand three major diseases. Besides a declaration of health, submission of a health check-up
report is required at the time of contract.
The percentage of adding Health Check-up Discount to the policy is about 80% and thenumber of policyholders who submitted a check-up report in FY 2018 increased by 2.4 times
compared to that of FY 2017.
According to the customer satisfaction survey targeting policy holders, in addition to“Suitable contents of the product” and “Extensive protection coverage”, “Discounts onpremium just submitting a health check-up report and as such” recorded the top three highest
customer satisfaction levels.
Discount rates of Health Check-up Discount vary according to age, but in the case of a
10-year term insurance, with Health check-up Basic and Health check-up Excellent,premiums become approximately 10% and 15-20% less respectively compared to those ofpolicies without Health Check-up Discount.
Health-promotion-type insurance holds the merit in its products as the more a healthcondition of an insured person improves, the less his/her premium becomes. This can be themotivation for healthy habits like “Let’s walk 8,000 steps a day on average,” which
eventually leads to the less payout of insurance money for life insurance companies.
With that being said, there are cautious responses to this particular trend.
Some of the arguments are including “How much level of the healthy activities will
actually be reflected to premiums. There are still unknown areas and we need to continue tostudy and research on the relationship between life insurance and those health promotion
activities or lifestyle improvements,” and “What happens if the insured stops his/her healthpromotion activities? Just increase the premium? If the health condition of the insured
deteriorates, there will be a possible risk that the insurance is no longer affordable for him
when he is in a great need of it.”
There are still quite a few hurdles that the health-promotion-type insurance has toovercome as it has just been set out.

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.