The final stage of Japan’s financial market’s
deregulation will open the door for banks to compete with insurers
across the full range of insurance products. At present, banks may
sell only savings products, an area where they have proved able
competitors.
In anticipation of full deregulation, Japan’s
second-largest life insurer, Dai-ichi Mutual (Dai-ichi), has
announced the launch of a new insurance company, Dai-ichi Frontier
Life (DFL), which will open for business on 1 October this year. A
wholly owned unit of Dai-ichi, DFL will focus on marketing savings
products via banks and securities firms. DFL will initially have a
paid-up capital of ¥50 billion ($430 million) and 117
employees.
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Dai-ichi said DFL represented a new business model and was created
in response to a changing business environment, in particular the
growing role of bancassurance and the privatisation of Japan Post.
DFL would not be “constrained by [Dai-ichi’s] existing regime”
which is focused on product distribution via a dedicated
salesforce, said Dai-ichi.
Japan’s domestic insurers have lagged significantly behind their
foreign competitors in harnessing the bank marketing channel in the
booming variable annuity market, which at the end of 2006 boasted
total assets of $124 billion. Almost all variable annuity products
are sold via banks and securities firms which, together, have
almost half a million employees licensed to sell insurance
products.
Dai-ichi Mutual’s is targeting DFL’s annual sales to reach more
than $8 billion within five years.
