The number of new life insurance policies in Japan has been recovering after falling when the COVID-19 pandemic erupted last year, says the Life Planning Department of The Toa Reinsurance Company.
In an article entitled Trends in Japan's Life Insurance Industry, carried in the “Japan’s Insurance Market 2021”, released last month by Toa Re, the Department says that although life insurance sales channels in Japan are becoming more diverse, insurance company sales personnel remain the largest channel. However, life insurance companies have had to refrain from face-to-face marketing by sales personnel to prevent the spread of COVID-19. As a result, the number of new policies decreased significantly at the beginning of the COVID-19 pandemic last year, and the impact was pronounced.
This has led to broad recognition that diversification of sales channels is more essential than ever, and companies are now accelerating initiatives to add sales channels that are not face-to-face.
Progress in digital transformation
Digital transformation (DX) initiatives are moving forward in Japan. The Ministry of Economy, Trade and Industry (METI) has issued guidelines for the promotion of DX, and under the guidelines DX is defined as innovations and creations in which “companies address major changes in the business environment using data and digital technology to innovate their products, services, and business models based on the needs of customers and society. They also create a competitive advantage by transforming their business, organisation, processes, and corporate culture.”
The government also established the Digital Agency on 1 September 2021 to promote DX.
These initiatives are progressing throughout society, and several life insurance companies have formulated DX strategies. For example, Aflac Life Insurance Japan formulated a DX strategy in September 2020. With the ongoing digitalisation of society, diversification of values, and rapid lifestyle changes, Aflac Life plans to generate sustainable growth by collaborating with fintech companies to use digital technology such as open innovation. Another initiative involves applying data analysis and predictive models that use artificial intelligence (AI).
In addition, Meiji Yasuda Life Insurance Company launched a DX strategy in April 2021 to address the impact on the life insurance business from the acceleration of society’s digital shift and changes in values brought about by the increased severity of the COVID- 19 situation. The strategy involves structuring sales and service models that integrate face-to-face and non-face-to-face, and automating and improving the efficiency of operations.
An operational efficiency improvement service using AI and optical character recognition (OCR) that Nippon Life Insurance and Nissay Information Technology offer is a specific example of DX. This service is designed to raise administrative efficiency by using AI-OCR to automatically digitalise each hospital’s non-standard documents such as receipts and medical statements, which had been technologically challenging to read accurately. The system was patented in Japan in August 2020.
Until now, digitalisation was mainly for simple and repetitive operations, but now DX is rapidly being adopted for a wider range of uses. Future trends such as how the ongoing implementation of DX will change insurance companies and their use of big data is now of great interest.