In 2019, Sumitomo Life launched Aiaru Syougakutankihoken Corporation as a subsidiary, and in 2021, Dai-ichi Life founded Dai-ichi Smart Small-amount and Short-term Insurance Company. Nippon Life launched Nissay Plus Small Amount and Short Term Insurance in April 2022 as a subsidiary.
The Toa Reinsurance Company indicated in its research titled "Japan's Insurance Market 2022" that
SASTI companies are restricted to offering insurance in the form of protection cover for small sums and a maximum period of one year or two years for non-life insurance. The entry capital requirement is a modest JPY10m ($70,350) or more. Through the development of SASTI corporations, enterprises ranging from real estate firms and consumer electronics mass merchants to trading companies have joined the market.
While insurance firms are subject to a license system for the selling of their products, SASTI companies are merely subject to a registration system (requiring only a screening process), allowing for greater product development flexibility. Consequently, non-life insurers created such entities within their groups early on and have been serving the SASTI market with an emphasis on tenants' fire insurance.
On the other hand, life insurers have been hesitant to enter the SASTI market because they typically offer policies with terms ranging from 10 years to entire life, making policies with one-year maturities an unattractive business.
FinTech as accelerant
However, this was altered with the emergence of FinTech. Companies are growing the amount of insurance products that may be purchased by smartphone, allowing them to target consumer segments consisting of individuals who were previously hesitant to purchase insurance, notably young people. SASTI is perfect for developing and commercializing products that correspond to specific demographics, as well as for meeting diverse consumer demands with a diverse portfolio of insurance products.
Entry into the SASTI market enables life insurers to approach more prospective clients. Major corporations also believe that the knowledge gathered through extensive marketing will facilitate group synergy. In truth, firms that are a part of the largest life insurance groupings provide innovative and adaptable new solutions.
Aiaru provides coverage in niche markets to fulfill specific target needs, such as fertility treatment insurance for women. Nissay Plus entered the market in April 2022, launching solutions that cover risks during pregnancy and after childbirth in partnership with partner companies. This was made possible by lifestyle changes and the pervasiveness of digital technology use.
All of these products take use of SASTI's qualities and would have been impossible to design and market fast within a typical insurance company framework.
The shrinking life insurance market in Japan is a result of the country's aging population; therefore, life insurance businesses must find new demands. The ability of life insurers serving the SASTI market to build synergies among group firms to develop expansion plans would be of interest.
0 Comments