An Empirical Survey of Japanese Life Insurance Customers-- Comparative Market Analysis Based on Consumers’ Recognition Data -by
Hiroko Oe and Tokio Otsuka1【Abstract】
This study aims to investigate characteristics of Japanese life insurance
customers’ behaviors and motives based on empirical data sources. The data wascollected from a questionnaire survey conducted by Japan Post in November, 2005. In
this study, customers’ evaluation view points are classified by several analyticalmethods and also estimation of their willingness to pay is to be studied.
This research especially takes notice of customers of life insurance services
provided by Japan Post, which is known as “Kan-po” for short. Japan Post is one of thebiggest public corporations and it has been managed by the government. Comparing tothose provided by private corporations, those provided by Japan Post have been said tobe purchased by wider range of customers.
Mainly in this study, the differences between “Kan-po” and other private ones
from the perspective of customers’ attitudes are comparatively analyzed. In conclusion,clearly different evaluation view points towards “Kan-po” and other private ones are
summarized and from there, some implication for the new branding of “kan-po” which isgoing to be privatized in about one year time is to be introduced.
<Key Words> Life insurance, Correspondence map, Item response theory, Latent trait
analysis

1 Hiroko Oe, Senior Researcher and Tokio, Oe, Researcher at the Research Institute of Japan Post.

Email address: h-oe@japanpost.jp and tokio@ruri.waseda.jp, 1-3-2, Kasumigaseki, Chiyoda-ku,
Tokyo 100-8798, JAPAN1

1.

Objectives and structure of this study
The main purpose of this study is to analyze consumers’ decisions on which life

insurance products to be purchased. To do so, for the first stage, image mapping ofseveral insurances is to be surveyed and the position of “Kan-po” among others is to be
grasped. From this, it becomes easier to understand which factors are meaningful forthe customers to decide which insurance products to purchase.
Secondly, “Latent Trait Analysis(LTA)” is employed to segment Japanese life
insurance market. Using LTA, one can reduce a set of many binary or ordered-category
variables to a small set of factors.-with LTA, these factors are called latent traits. Just
as with factor analysis, this can be done for data reduction, data exploration, or theory
confirmation 2 . In this study, consumers’ responses to questions about aspects of
insurance products are employed for this method, and investigate characteristics of thepeoples’ responses to those features. In the field of life insurance studies, it is the firsttime to employ this approach3.
Lastly, the output of the research is summarized and also implication for themarketing and new branding strategy of “kan-po” is discussed, which is followed by the
future study plan. For these consecutive analyses, data set gathered from questionnaire
contains a broad range of detailed households’ information. This was conducted by the
Research Institute of Japan Post in November, 2005.
2.

Literature Review and Discussion Points
Surprisingly, there is not a sufficient accumulation of analyses of life

insurances, but most of those seem to be focused on estimation of life insurance demandof households. Some of the typical and leading studies are as follows; Matsuura andShiraishi(2004), Kasuga and Matsuura(2000), Kanda(2000), and Masuda(2000) haveinvestigated the relations between life insurance demand and other demographic
2 LTA models are found to be flexible and useful, and it can be used in many specialized ways. Their
power and flexibility derive from the fact that they are formalized probability models--they include a"theory" that relates the unobserved (latent) construct(s) of interest--educational attainment, disease
severity, program effect, etc.--to the observed (manifest) variables that are actually measured.
3

With educational testing in particular, this method has proven very effective. Many well-known
tests of academic ability and attainment, such as the SAT, the GRE and the LSAT, are analyzed. In
this context, latent trait models let one precisely measure the difficulty or easiness of each item,
determine the association of each item with the construct being measured, and determine which
items are biased in the sense of having different meanings or measurement characteristics in2

factors to analyze the financial demand of households. Some other studies have been
concentrating around more detailed or specific financial demand behaviors, for instance,
KasugaandMatsuura(2000),

Saito(2000),

Tachibanaki

andShimono(1994),

Nagai(2001) and others especially focused on the relations between characteristics oflife insurance products and their demand towards them.
Recently the topic of privatization of “Kan-po” is being roused and at the sametime the interest in the position of “Kan-po” in the market is also raised, then someanalyses can be seen focusing on this issue from perspective of comparing with otherprivate life insurances. But most of them followed the predecessors’ method which isbased on demand estimation analyses, there the evaluation view points of theconsumers themselves or “acknowledgement of subjects” are not paid attention to.
Regarding this point, which has not been included in the most of the past
typical literatures, baring in mind that Japanese life insurance market structure isfacing a drastic change, this might has a big impact on consumers’ behaviors, it isimportant to survey the households’ demand for life insurances based on these
consideration data which is also available from the questionnaire mentioned above.

３.

Data Analysis

3.1

The data and basic descriptive statistics
The data was collected using a questionnaire between 11 October and 10

November 2005. The questionnaire contains a broad range of detailed households
information. This data set contains the data needed for the analysis here, such asprivate insurances, “Kan-po”, and purchasing intentions. The number of valid responses
was 4,0094, which represents response rate of 46%. The basic characteristics of samples
are shown in chart 1.

different subpopulations and so on.
Out of 4,009, 3,182 responses were from households with two members or more, and the 827 werefrom single-person households.

43Chart 1: Basic Characteristics of Samples

Household Income

Householder's Gender
50 - millions
0.0%

NA
2.8%

- 50 millions
0.7%

Female19.0%
Female18.7%- 20 millions
1.7%- 15 millions
7.2%- 2 millions
13.9%- 10 millions
9.0%- 3 millions
14.0%- 8 millions
7.2%

Male
81.3%

- 4 millions
13.1%- 7 millions
7.8%

Male
81.0%

- 6 millions
10.3%

Outside：2000 Population Census
Inside:This Suvey- 5 millions
12.2%

N=4009N=4009Householder's Age
0%This Suvey

10%

30%

40%

17.4

13.3

5.3

2000 Population Census

20%

20s

N=4009

60%

70%

24.8

17.9

15.8

12.4

50%

30s

80%

23.6

23.3

40s

50s

60s

90%

100%

15.5

18.7

12

70s

The ratio of purchasing of any life insurance products is 87.6 %, and within thelast one year, the ratio of newly purchasing life insurance products is 30.2% as shown inchart 2.
Chart 2: Tendencies towards Life Insurances 1Life Insurance Services Taken Out within a Year

Popularity of Life Insurance Services

70

30.0%

60

25.0%

50

20.0%

40

15.0%

30

10.0%

20

5.0%

10
0

No
is u
ran

la
(O

ce

id
th e

)

r)

%

c)

N=4009

(JA

ce

t ua

ran

r)

gn

th e

)

(O

id

id

Mu

la

la

)

r ei

(JA

Fo

id

0.0%

NA

t ua

la

is u

Mu

)

No

te (

gn

tua

s ti

r ei

Mu

iv a

Fo

t ua

Pr

Mu

os t

os t

te (

nP

c)

iv a

me

s ti

Pr

pa

me

nP

Do

Do

pa

Ja

Ja

te (

te (

iv a

iv a

Pr

%

Pr

N=1209Any insurance fallen due within a year is 12.1%, and any insurance lapsed or4

surrendered within a year is 7.7% as shown in chart 3.
Chart 3: Tendencies towards Life Insurances 2Life Insurance Services Lapsed or Surrendered within a Year

Life Insurance Services Fallen Due within a Year

60.0%

60.0%

50.0%

50.0%

40.0%

40.0%

30.0%

30.0%

20.0%

20.0%

10.0%

10.0%

0.0%

0.0%
la
id

id

(F o

(O
th e

A)

)

r)

)
ti c

gn

es

r ei

(J

t

om

os

(D

la

t ua

t ua

Mu

Mu

te

te

nP

iv a

pa

iv a

3.2

Pr

Ja

Pr

%

N=485

%

Pr

iv a

Ja
te

(D

om

es

ti c
)

pa

nP

Pr
os

t

iv a

te

Mu
(F o

rei
gn

)

t ua

la

Mu
id

(J

A)

tua

la

id

N=308
(O

th e

r)

How they decide what to purchase

Chart 4 is showing the consumers’ reasons why they selected the insurance product.
Comparing with private insurance products, “Kan-po” purchasers’ any one reason out of seven issignificantly outstanding, but as a whole, they appreciate “premiums”, “insurance function” and“savings function”.
Also chart 5 shows that consumers’ image map of several different insurance services. From
this correspondence analysis method5, mainly two clusters can be observed, one is a category of“product characteristics” and the other is of “service provider characteristics”. “Kan-po” is being
grouped as the latter one accompanied with mutual aid(JA).

5

Correspondence analysis is a method of factoring categorical variables and displaying them in aproperty space which maps their association in two or more dimensions. It is often used where atabular approach is less effective due to large tables with many rows and/or columns. Though not
limited to that arena, correspondence analysis been popular in marketing research, as to display suchvariables as customer color preference, size preference, and taste preference in relation to5Chart 4: Factors of Choose Products

Factors of Choose Products
70%

Insurance Function

60%
Savings Function

50%
Reliability toManagement

40%
30%

Sales Staff

20%

Advertisement

10%

Premium0%Private(Domestic)

Private(Foreign)Japan Post

Mutual aid (JA)

(N=335)(N=123)(N=199)(N=53)

Comparison with Other
Services

Chart5: Positions of Each Service Providers

Dimension2
Service characteristics

Service providers’characteristics

Dimension 1
preferences for Brands A, B, and C.

6

3.3

Latent Trait Analysis based on “Item Response Theory”

Item Response Theory is the study of test and item scores based on assumptions concerning
the mathematical relationship between abilities (or other hypothesized traits) and item responses.
Other names and subsets include Item Characteristic Curve Theory, Latent Trait Theory, Rasch
Model, 2PL Model, 3PL model and the Birnbaum model.
In the following chart 6, the x-axis represents student ability and the y-axis represents theprobability of a correct response to one test item. The s-shaped curve, then, shows the probabilities
of a correct response for students with different ability (theta) levels. In this report, this IRT isapplied to customers’ evaluation view points towards life insurance products

Chart 6: ITR Function

Based on this theory, normal distribution was assumed, the feature of eachfactor is shown by 'Importance level' and 'Discrimination level'. Through these, deciding
factors which insurance services to be purchased are analyzed. The interpretation of'Importance level' shows how they value each factor. The higher this level is, the more
people value that factor. On the other hand, 'Discrimination level' is expressing the sizeof the change in the factor. That is, it is meant that a factor which is of big in this level,
it is a factor of a big differentiation among samples according to the people’s
acknowledgement. Item Response Theory, ie 2-parameter-logistic model is given as
follows.

P (θ ) =1
1 + exp(− Da(θ − b) )a: Discrimination parameter,
b: importance parameter,
θ: ability level,7D: an invariable（1.7）

The results of the analysis of private insurance purchasers is shown in chart 7
and table 1 and 2.
Chart7: Analysis 1 – Domestic Private Insurance Companies
1

0.5

0
0

1

Insurance Function
Sales Staff
Comparison with Other Services

2
Savings Function
Advertisement

3

4
Reliability to Management
Premiums

Table 1: Output of parameters (private companies)

Rank
1
2
3
4
5
6
7

ImportancePremium
Insurance Function
Sales Staff
Savings Function
Reliability to Management
Comparison with Other Services
Advertisement

Discrimination
Reliability to Management
Advertisement
Insurance Function
PremiumComparison with Other Services
Sales Staff
Savings Function

Table2: Ranking of factors in each theta segment
Rank
1
2
3
4
5
6
7

0
Premium
Insurance Function
Sales Staff
Savings Function
Reliability to Management
Comparison with Other Services
Advertisement

Relative Importance of each factor in a Latent Trait Scale
1
2
Premium
Insurance Function
Insurance Function
Premium
Sales Staff
Reliability to Management
Savings Function
Sales Staff
Reliability to Management
Savings Function
Comparison with Other Services Comparison with Other Services
Advertisement
Advertisement

3
Insurance Function
Premium
Reliability to Management
Sales Staff
Savings Function
Advertisement
Comparison with Other Services

The likewise analysis regarding “Kan-po” purchasers is shown in chart 8, table8

3 and 4. From these several charts and tables imply that consumers recognize and value
different aspects of these two products differently but typically, this comparison can besummarized in table 5 and 6.
Chart 8: Analysis 2 – “Kan-po
1

0.5

0
0

1

2

3

Insurance Function
Reliability to Management
Advertisement
Comparison with Other Services

Savings Function
Sales Staff
Premium

4

Table 3: Output of parameters (“kan-po” by Japan post)

Rank
1
2
3
4
5
6
7

ImportancePremium
Sales Staff
Reliability to Management
Savings Function
Comparison with Other Services
Insurance Function
Advertisement

Discrimination
Insurance Function
Reliability to Management
Premium
Savings Function
Sales Staff
Comparison with Other Services
Advertisement

Table4: Ranking of factors in each theta segment
Rank
1
2
3
4
5
6
7

0
Premium
Sales Staff
Reliability to Management
Savings Function
Comparison with Other Services
Insurance Function
Advertisement

Relative Importance of each factor in a Latent Trait Scale
1
2
Premium
Insurance Function
Insurance Function
Premium
Reliability to Management
Reliability to Management
Sales Staff
Savings Function
Savings Function
Sales Staff
Comparison with Other Services Comparison with Other Services
Advertisement
Advertisement

3
Insurance Function
Premium
Reliability to Management
Savings Function
Sales Staff
Comparison with Other Services
Advertisement

9Table 5: Comparison of “Importance level” between two services

Insurance Function
Savings Function
Reliability to Management
Sales Staff
Advertisement
PremiumComparison with Other Services

ImportancePrivate(Domestic)-2.1121-2.2929-3.326-2.2562-4.182-1.8883-3.177

＞
＞
＜
＜
＞
＜
＜

Japan Post
-2.4574-2.3665-2.2831-2.0331-3.2709-1.8351-2.4459

Table 6: Comparison of “Discrimination level” between two services

Insurance Function
Savings Function
Reliability to Management
Sales Staff
Advertisement
PremiumComparison with Other Services

Discrimination
Private(Domestic)
2.6117
1.94973.1733
2.09633.12862.37332.3308

＜
＜
＞
＞
＞
＞
＞

Japan Post
3.08932.22152.28971.6527
1.13962.25611.3025The tables above show that from “Importance level” factors, reliability to
management and sales staff are more valued for “Kan-po” and insurance and savings
function are more valued for private insurances. On the other hand, from“Discrimination level” factors, reliability to management and sales staff are more
discriminated for private companies, and insurance and savings function are more
discriminated for “Kan-po”.

4.

Conclusion
Up to now mainly based on the consumers’ consideration data, the comparative

analyses between private and “Kan-po” insurance products have been conducted, theoutputs from these imply that consumers view points or evaluation miza towards these
two service groups are differentiated.
Private insurance products can be summarized that they are purchased by corefactors regarding insurance functions themselves, and “Kan-po” is selected by reliability
to management, that is, trust towards the service provider which is “Nation” at thisstage. This means that “Kan-po” which has been selected and also appreciated by its

10trustworthiness for the management body and sales staff, has to consider carefully andcontemplate for the new brand of after-privatized “Kan-po”.
Also, under the circumstances that the position of life insurances as a wholemust be becoming greater in due course in the households’ financial products selection,
the importance of this kind of analyses based on recognition data must be providing newaxes and scope for the researchers, the process and output shown here are expected tohave some implication in this field of study.

【References】
Kasuga and Matsuura(2000), “Debt Restriction and Selection of Risk Property”
Discussion PaperN2000-08, Research Institute of Postal Services
Kanda(2000), “Household’s Portfolio including Life Insurances”, Management of Life
Insurance, Vol.68, No.6
Matsuura and Shiraishi(2004)

Selection of Properties and Japanese Economy- fromthe perspective of Households-, Tokyo:Toyo Keizai Shinpo-sya
Tachibanaki and Shimono(1994), Individual Saving and the Life Cycle, Tokyo: Nikkei
Shimbun Press.
Uebersax, J.(2000) “Latent Trait Analysis and Item Response Theory (IRT) Models”
http://ourworld.compuserve.com/homepages/jsuebersax/lta.htm

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