The Current Situations and the Future of Cooperative Insurance in Japan

Japan Cooperative Insurance Association Incorporated (JCIA)

26th August 2014

ＡＯＡseminar

1The Current Situations and the Future of Cooperative Insurance

in Japan

The Current Situations and the Future of Cooperative Insurance in Japan

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1. Insurance/Cooperative Insurance Market in Japan

2. Cooperative Insurance

3. Response to the Great East Japan EQ

4. Cooperative Insurance in the Future

(1) The Current Situation of Insurance/Cooperative Insurance Market in Japan


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Source: Swiss Re Sigma Report

0％


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② Shrinking Market

Insurance market has not shown much growth on premium income as it has come to maturity.

decreasing birthrate and aging population, and depopulation, etc.

Ratio of the people who are older than 65 years old to the population

25.0%(2013)* ⇒ 33.4%(2035)**

*Source: Cabinet Office New Document

**Source: Population Projections for Japan (IPSS)


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③ Diversification of Distribution

1996 Automobile insurance by online distribution

2001 At the bank

2000’s Internet insurance is wide spreading.


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④ Diversification of Needs for Coverage

decreasing birthrate and aging population

Working generation which supports financial resource for public security is decreasing

The aged who receive benefit are increasing

Uncertainly about public security in the future

Needs of coverage for health, annuity and nursing is increasing.


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Natural Disaster

Great East Japan EQ

⇒ Earthquake and tsunami are attracting attentions.

Rate of householder which owns earthquake insurance

11.6%(1995) ⇒ 27.1%(2012)

Source: GIAJ Home Page


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The increasing of the insurance needs which comes from the risk derives from weather changes such as gales, flood and heavy snowfall

Torrential Rain

Flood damage occurs not only river sides but also not in the areas.

Wind and Snow Damage

Typhoons as well as tornadoes

In winter, snow damage

(2) The Organizational form of Insurance/Cooperative Insurance in Japan


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① Life Insurance Company

38 stock companies

5 mutual companies

② Non-Life Insurance Company

27 stock companies

There is no mutual company providing non-life insurance

at present.

Financial Services Agency supervises Life insurance companies and

non-life insurance companies in accordance with Insurance Business Act.


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③ Cooperatives which Provide Cooperative Insurance

Business

Non-profit Organization

People who desire to improve their lives voluntarily

gather and carry out various activities by themselves.


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(1) What is Cooperative Insurance?


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Japanese insurance market has developed rapidly with

economic growth after World War II.

But there were some people who had been left from

securities because the insurances which insurers

provided did not fit their needs for various reasons.

genders, occupations and income levels, etc.

The cooperative insurance business was certified by

Japanese government, owing to these new society

needs.


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Cooperative Insurance business is…

Mutual aid system to stabilize the levies

Members share their premiums to establish mutual

assets in advance.

Claims will be paid at unexpected contingencies,

such as the cases of death and disasters, etc.


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Significant Features of Cooperative Insurance Business

Every government Ministry (Agency) sets up each

cooperative Act to regulate cooperatives respectively.

Cooperatives provide…

Various people who are engaged in agriculture and

fishery, wage-workers, consumers, self-employed

and medium-sized business owners, etc.

The coverage can be adjusted for each member.


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Governing Law Administrative Office Cooperative Insurance Societies

The Agricultural Cooperative

Society Law

Ministry of Agriculture,

Forestry and FisheriesZenkyoren

The Fisheries Cooperative

Association Law

Ministry of Agriculture,

Forestry and FisheriesKyosuiren

The Consumers’ Livelihood

Cooperative Society Law

Ministry of Health,

Labor and Welfare

Zenrosai

JCIF

Nihon Saikyosairen etc.

The Law on Cooperatives of

Small and Medium

Enterprises, etc.

Ministry of Economy,

Trade and IndustryNikkaren etc

(1) Overall Performance of the Cooperative Insurance Business


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FY2012 FY2002 Growth(%)

Number of Members (in thousands) 75,276 66,033 14.0％

Number of Policies (in thousands) 156,638 144,932 8.1％

Premium Income (in millions of yen) 8,976,802 6,803,887 31.9％

Claims Paid (in millions of yen) 4,405,291 3,476,692 26.7％

Total Assets (in billions of yen) 57,974 45,681 26.9％

Overall Performance of the Cooperative Insurance Business for the last 10 years

(3) The Features of Cooperative Insurance


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① The cooperative users are members.

Users are members of cooperatives in principle.

② Specialized in the Household Sector

Main products are for individual/households.

③ The business activities are limited to the domestic market.


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④ Providing Both Fields; Life Insurances and Non-life

Insurances

Conducting both life insurances and non-life insurances

Simple Products

⑤ Prohibition of Profit-making Business

Non-profit Business

⑥ The Limitation of Our Surplus Usage

The surplus is distributed to the members and also

reserved as mutual asset.

(4) Main Line of Business in Cooperative Insurance


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Cooperative insurance has been gaining more support

from the members and steadily developed our business.

Cooperative insurance unique system and contribution

according to each form of organizations, etc.

Cooperative insurance has been also changing with lives

of the members and their needs of coverage with the

times.


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When cooperative insurance began…

Coverage for bereaved families

Coverage for house damage by fire

1970’s

Coverage for automobile accidents

The increase of automobile caused a larger

number of traffic accident.


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1980’s

Coverage for uncertainty about annuity and

medical in the future

Coverage for our whole life time

1990’s

Coverage for natural disasters

Coverage for nursing care

(5) Distribution for Insurance/Cooperative Insurance


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Source: JILI of Activities for fiscal 2012


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Source: GIAJ News Release


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③ Distribution of Cooperatives Which Provide Cooperative

Insurances

Cooperative insurances have significant features which are unique

applicable network as the cooperative.

Regional cooperative movement, network and word of mouth

among members and cooperation in labor unions, etc.

Zenkyoren; Agricultural Cooperatives, Life Advisers

Kyosuiren; Fishery Cooperatives

Zenrosai; Labor Unions and Mail Order

JCIF; Consumer Cooperative Stores, Delivery Center

Nikkaren; Regional Commerce Business Cooperatives


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Life Insurance Companies Non-Life Insurance CompaniesCooperative Insurances

( Member Societies of JCIA)

No. of Claim

Payments

Amount of

Claims Paid

(million yen)

No. of Claim

Payments

Amount of

Claims Paid

(million yen)

No. of

Claim

Payments

Amount of

Claims Paid

(million yen)

Life Insurance 21,027 159,900 - - 10,748 65,700

Building

Insurance- - 783,648 1,234,500 856,558 1,080,600

Total 21,027 159,900 783,648 1,234,500 867,306 1,146,300

(As of Mar 2013) (As of May 2012) (As of Aug 2013)

Claims paid is competitive with the other life insurance companies and non-

life insurance companies.

People have had a better new recognition for the society role of cooperative

insurance in Japan.

Payment for the Great East Japan EQ (occurred on 11Mar 2011)

Source: LIAJ and GIAJ Home Page


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(1) Reconfirm the value as cooperative


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① Strength as a Cooperative

Severe times is making the role of cooperatives which

embodies mutual aid larger.

It is necessary for cooperatives to reconfirm the

value/role as the cooperative and rebuild their

framework.


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② Value of Member Participation

The way of participation has changed to show not only an aspect as the contractor to receive coverage but also an aspect of the member.

The place where members can participate by their own ways

Cooperatives try to make up better organizations/products with members.


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③ Cooperative Insurance as Starter

Cooperative insurance is one of the many

cooperative businesses.

It is necessary for cooperative insurances to take

more roles such as educating members and

contributing to regional societies, etc.

(2) Respond to Member’s Needs


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① Respond to the Needs of Coverage

Enhancing coverages for natural disaster, health, and

annuity, etc.

It is necessary for cooperative insurances to provide

coverages and services for the new risks caused by

decreasing birthrate and aging population.

Developing new products related nursing

Sharing information related nursing care


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② Better Business Operation

It is necessary for cooperative insurances to

become sociable for wider generations.

Appropriate and prompt payment of claims

Improving Response quality of explanation for

members etc.

(3) Approaches To Strengthen Operating Foundation


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In order to provide the members with eternal relief,

cooperative insurances need to strength financial

soundness.

JCIA also hold the workshops on the theme about

international regulations, IFRS and Solvency II, etc. for

member societies.

Thank you for your kind attention.34

Japan Cooperative Insurance Association Incorporated (JCIA)

Research & Study Department

General Manager Yoshinori Harayama

The Current Situations and the Future of Cooperative Insurance in Japan

Economy & Finance

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