Japan is a place of contrasting fortunes for life insurers. As the world’s third-largest economy, and a country of 120m with an average lifespan of 84 years, Japan is blessed with both the healthiest and oldest population in the world. Yet this enviable position has brought with it a pension shortfall approaching $200,000 USD per household, as seniors struggle to support themselves post retirement. Appreciating this paradox, several Japanese insurers and startups are trying to ready their customers for the financial and healthcare costs they will face in old age, in addition to meeting the demands of a younger digital generation. The innovations developing as a result of this are worth considering.
justInCase is unusual for having an underwriting license and multiple digital insurance offerings in a market known for its conservative regulation and prudence. These include:
- A SASTI license (Small Amount and Short-Term Insurer) that allows justInCase to distribute gadget, travel and car insurance across dozens of Japanese internet platforms. Although this model was pioneered by Zhong An, justInCase is now being localised to a Japanese audience.
- An API that facilitates the distribution and issuance of short term/low limit policies by established insurers. For example, justInCase is providing an API to Dai-ichi Life, which it is using to optimise the conversion rate of personal accident insurance on Dai-ichi Life’s web app Snap Insurance.
- justInCase is the first insurer in Japan to launch a P2P insurance program similar to those provided by Ant Financial Services Group in China. justInCase got approval through a regulatory sandbox to market this product, which covers cancer diagnosis with ¥800,000 of benefit.
The justInCase user experience is similar to the AliPay P2P insurance scheme, but the user interface has been localised for Japanese users.
Launched in 2017, Hokan is the only Japanese InsurTech with a CRM tool designed to optimise Japan’s agency force. Hokan’s mission statement reflects Japanese culture – “updating the insurance industry, not revolution or disruption”, which stands in stark contrast to the Silicon Valley mantra of challenging incumbents.
Hokan’s agency management dashboard provides insurers with insights by benchmarking an agent’s performance.
A healthcare startup founded in 2018 to help hospitals improve their operations through software. Linc’well allows hospitals, clinics and regional healthcare centres to make reservations, take calls, accept payments and manage electronic medical files. Although this is reminiscent of Ping An’s Good Doctor app, Linc’well is attempting to unite Japan’s traditional and disparate healthcare network.
Modulus is a Tokyo-based medtech that runs pre-clinical stage drug discovery programs for oncology and inflammatory/immune disorders. Its goal is to supply inexpensive drugs at an early stage through the efficient research and development of new drugs. Dai-Ichi Life has become one of its biggest shareholders.
A well-known American InsurTech, Trov is expanding into Japan through a partnership with Sompo Insurance and Bic Camera Group, a large electronics retailer in Japan. Although the exact product lines remain unclear, it is likely that Bic Camera will provide the sales channel, Sompo will provide the insurance products, and Trov will bring the underlying technology and user experience.
Although Japan’s aging population is no secret, the fact that 70% of seniors suffer from some form of chronic disease means life insurers are particularly exposed to this demographic shift. Health2Sync is based in Taiwan but considers Japan its most important market. The company’s blood glucose monitoring meter can plug into a phone directly, enabling patients to obtain personalised care for a range of chronic diseases including diabetes, heart disease, and high blood pressure. In December 2019, Sompo Himawari Life developed medical insurance for diabetics using Health2Sync’s Sync Health.
Founded in 2015 by Japanese internet service company DeNA Co Ltd, and Sumitomo Corporation, DeSC Health is developing a variety of healthcare services centred on the operation of the health promotion portal Kencom. Kencom has various functions such as data health services for health insurance associations, health check-up data management, individual information provision, and points.
Japan suffers disproportionately from natural disasters. Considering this, several Japanese insurers have undertaken nat cat efforts to mitigate the financial and social costs of disasters. For example, Sompo Japan Insurance, a P&C insurance company of Sompo Holdings, has been particularly active in its efforts to automate responses to floods, droughts and hurricanes through parametric-based solutions.
Japan is also regularly struck by earthquakes. Recognising this, Sompo Japan has teamed up with the Line messaging app to bring parametric offerings to Line’s 80m Japanese users. If the Line location monitor indicates that a policy holder is within the radius of an epicentre, Line will send the policyholder a message containing instructions on how to claim the pay-out.
Dai-ichi Life is interesting for its willingness to work with both local and international startups. Dai-ichi has been particularly keen to pursue new capabilities within old age care, these include;
- CureApp: Japanese startup that develops software based medical devices
- Neurotrack: US startup that develops apps that measure cognitive functions by eye tracking
- Integral Geometry Science: Japanese startup that develops breast cancer visualisation systems
Another segment that Dai-Ichi has become particularly active in is wealth management products. In Japan the average age of retirement has not kept pace with higher life expectancy, and more than 70% of retirees’ assets are in cash (yielding very low returns).
Japan is in the midst of an InsurTech boom sparked by a recognition that this large and mature market is under penetrated. It is interesting to note that Japanese life insurers are pursuing startups just as eagerly as their American and Chinese counterparts. And for many in Japan, the view that conservative regulation is stifling innovation is fading, opening the door for an acceleration of new product development.