Japanese life insurers are likely to cut premiums by 5-10% beginning next year, as the data they use to calculate insurance charges is expected to be revised to reflect longer life expectancy, reported the Nikkei Asian Review.
The Institute of Actuaries of Japan will soon propose changes to its Standard Mortality Table to the Financial Services Agency. This is being done for the first time in 11 years, and will kickstart the process for premium changes as early as April 2018. Industry leaders such as Nippon Life, Dai-ichi Life Holdings, Meiji Yasuda and Sumitomo Life will be the first affected, while second tier players like Daido Life, Taiyo Life, Fukoku Mutual and Asahi Mutual are expected to follow suit.
The Nikkei Asian Review said that in an early draft of the institute's changes, the standard death rate for a 40-year-old male was revised downward by around 20% from 1.48 per 1,000 men in 2007 to 1.18. The rate for a 40-year-old female decreased from 0.98 to 0.88. Overall improvement across all age groups came to 24.4% for men and 15% for women.
Key factors for those changes include advancements in medical technology and a drop in suicides amid an economic recovery. As a result, average life expectancy has increased between 1.62 and 2.53 years. The gains are more pronounced among those in their 30s and 40s, who are thus expected to see bigger premium cuts than older policyholders.
The reduced premiums will only be offered to new customers or existing customers renewing policies and not existing policies, with actual reductions depending on the insurers, said the Nikkei Asian Review.
Average premium reduction for whole life insurance policies across all age groups is expected to come to slightly less than 5%. Meanwhile, health insurance premiums are likely to increase by an average of 5% or so, since people living longer means more medical insurance claims.