Lloyd’s of London will use the current wave of financial deregulation as a tail wind to expand business in Japan through its new Japanese unit, according to Lloyd’s Japan Inc. President Kunihiko Sasamoto.
Lloyd’s Japan, which began operations April 1, is the first overseas direct general agent for London-based Lloyd’s, whose history goes back over 300 years. Lloyd’s, a pioneer in reinsurance — insurance for insurance firms — is known as the king of insurance organizations.
In Japan up to now, Lloyd’s had only reinsured its Japanese insurers. Sasamoto said Lloyd’s Japan now intends to specialize in underwriting insurance that covers corporate risk, and added that further liberalization of domestic insurance laws could open more business opportunities by encouraging the development of new products. “In Japan, insurance firms sell the policies they themselves want to sell, while Lloyd’s aims to sell insurance products the consumer wants to buy. If we dig deeper down to seek (corporate) customer needs, I am confident there is room to open up new product areas,” he said.
Sasamoto said his objective was to have Lloyd’s Japan earn an annual 5 billion yen in premiums in about five years’ time. This figure is the equivalent of roughly 0.5 percent of the corporate risk-related nonlife insurance market in Japan.
Even after the establishment of Lloyd’s Japan, Lloyd’s of London will also continue to maintain close ties with the Japanese market, Sasamoto said, but the Japanese unit will aim to handle direct underwriting and the underwriting of reinsurance on a case-by-case basis. “While handling reinsurance, we at Lloyd’s long saw Japan as being an ‘orderly’ market, as opposed to being a competitive one, but that also had its merits, such as making earnings predictable,” Sasamoto said.
He predicted that while insurance deregulation would be an opportunity to expand in the direct underwriting field, it could lead to greater competition and less predictable profits in the area of reinsurance. Lloyd’s enters the Japanese market at a time when the domestic financial scene is undergoing great change. “As for Lloyd’s, our knowhow in insurance underwriting is our only weapon (in entering Japan,) and our risk-control skills are our most important asset,” Sasamoto said. “So we will make every effort to have this recognized.”