In Japan, the average life insurance customer is 47 years old, and will have a 70% chance of buying life insurance through a tied agent.
One start-up life insurer has become hugely successful, gathering a customer base where 75% are aged 39 or less (and 25% below the age of 30), by selling primarily online. How did the company do this?
It would be helpful to start with a little background on the unique history of the Japanese life insurance industry. After the World War II, all industries in Japan, including insurance, entered a massive rebuilding stage.
To allow domestic insurers to grow and thrive, Japan’s Ministry of Finance eliminated all competition. Foreign companies were not permitted to do business in Japan.
Domestic companies were allowed to sell only a particular list of life insurance products, at a set price. With no ability to differentiate by product or price, life companies sought to distinguish themselves by racing to build massive tied agent channels.
True competition in the Japanese life insurance industry did not begin until 1980, when revisions to the Foreign Exchange and Foreign Trade Act eased restrictions on foreign direct investment in Japan.
This culminated in the 1995 revision to the Insurance Business Act that liberalised the life insurance market by letting companies introduce a wider range of products and giving greater freedom to fix rates.
In 2008, life insurance in Japan was first sold on the internet. Lifenet’s 64-year-old president, Haruaki Deguchi, saw this new technology could be an opportunity to pursue a younger market. However, there were not yet any material internet-only life insurance success stories anywhere in the world to emulate.
So Deguchi rolled up his sleeves and had Lifenet conduct fundamental research into Japan’s life industry. He found Japan’s life market consisted primarily of expensive and complicated products sold by agents who had not received adequate training.
With this analysis in hand, Lifenet set out to develop simple life products with transparent definitions and good value, that could be sold over the internet and would appeal to younger buyers.
In May of 2008, the company launched its first two products: Term Life and Whole Life Medical. Lifenet added a long-term disability income product in February 2010, then, in October 2012, the company launched a medical reimbursement product that includes coverage for advanced medical care treatments.
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