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Japan insurance market just a phone call away

by Philip Brasor

For the past several years, the insurance industry has been battered on two fronts by bad publicity. On the one hand, the collapse of almost all the major life insurance companies has been blamed on poor investment choices and even poorer management, while on the other, the spate of recent murder-for-insurance cases points up how easy it is to manipulate the system for illegal purposes.

In a nation that prides itself on the highest savings rates in the world, insurance practically sells itself. In addition, life insurance has traditionally been pushed by housewives to friends and relatives. Under this system, a customer is as likely to buy a policy from Aunt Sachiko in Chiba just to get rid of her as she is to buy one because she feels she needs coverage. Consequently, most customers don’t really know what they’re buying and, conversely, most salesladies don’t have to know what they’re selling.

The average person signs up for insurance in a haze of confusion and ignorance as to what her policies offer and what they don’t. When the media first started reporting the industry’s financial problems several years ago, policyholders suddenly realized that, unlike the money they saved in banks, the money they had invested all those years in life insurance wasn’t protected. Policyholders are more like shareholders, which means they would go down with the company if they were still on board. Panicked, people started jumping ship.

Likewise, when it was revealed earlier this summer that a woman poisoned her three children in succession to collect insurance taken out on their lives, the media asked why the insurance companies involved didn’t find the ghoulish coincidence suspicious. In the West, insurers do whatever they can to avoid paying claims, but considering how often this kind of incident has happened here lately it seems as if Japanese companies don’t even understand their own rights. If “Double Indemnity” had taken place in Kanagawa instead of California, Fred MacMurray and Barbara Stanwyck would have lived happily ever after.

The insurance market here is apparently so lucrative that companies can survive the occasional cheats and the gaping loopholes. Think of it: One-third of all the suicides in Japan are carried out by men in debt who’ve taken out life insurance policies on themselves. The companies almost always pay.

It’s no wonder that foreign insurers drool over the Japanese market, and thanks to deregulation and the domestic industry’s own short-sightedness, outsiders are raiding the cookie jar with a ferocious appetite. The most prominent foreign player right now is American Family Life Assurance Company (AFLAC), whose power in Japan has been in so-called “supplementary insurance” for automobiles, property and hospitalization. Two weeks ago, its profile grew even larger when AFLAC and Dai-ichi Mutual Life Insurance announced a major alliance to sell each other’s products once a new law takes effect in January.

Unlike traditional insurance advertising, AFLAC’s ads go straight for the pocketbook. American to the core, the company’s main sales points are simplicity and low price.

In one spot that has saturated the airwaves since last year, a TV reporter with a microphone accosts commuters at a train station and asks them about their insurance. The respondents don’t even say the name of their insurance companies. Each one simply raises a hand and wiggles it next to his or her face, thumb and pinkie extended. This charade of a telephone call is not original, but because it had been used so extensively in AFLAC’s previous commercials the viewer automatically knows which company the respondents use.

Since it’s difficult to copyright a gesture, smaller supplementary insurance companies have begun using it in their own print ads and newspaper flyers, which means they are indirectly and inadvertently shilling for AFLAC. The genius of the gesture is how easily it conveys the company’s marketing strength, which is that you can sign up right over the phone — no busybody insurance salesladies, no health checkups, no expensive premiums to cover overhead.

“Cancer insurance” is especially lucrative in Japan, and AFLAC controls 90 percent of the market. Of course, national health insurance covers cancer treatment. Cancer insurance just gives you some extra cash after you’re diagnosed, which means you can afford a nicer hospital room (or a fatter envelope of the cash that’s traditionally passed under the table to ensure good treatment). The AFLAC ads are quite clear in this regard, as they show a smiling cancer patient in a private room strumming a guitar.

The point is not the particulars of the coverage as much as the low cost: How can you not afford to have cancer insurance when it’s so cheap? Health insurance remains the stickiest issue in the U.S. presidential race because an increasing number of Americans don’t have it and medical costs continue to rise.

In contrast, the Japanese seem over-insured, which is probably why so many people don’t understand their coverage.

Two weeks ago, a reader wrote a letter to The Asahi Shimbun saying that when he tried to use his national health insurance to pay for treatment after an auto accident, the hospital refused, telling him he had to use his auto liability insurance or that of the other person involved in the accident. He thought it was odd, and the newspaper replied that the hospital should have accepted his health insurance to pay for his treatment.

What’s interesting is that even The Asahi Shimbun had to check with an expert to find this out.