Major life insurer Yasuda Mutual Life Insurance Co. and U.K.-based Direct Line Group announced Wednesday they will form a joint venture to sell automobile insurance through direct channels.
The venture will specialize in the direct sale of risk-differentiated automobile insurance, in which premiums vary according to a driver’s risk factors, such as age, sex and area of residence.
The announcement marks the first time a major life insurer has plunged into the risk-differentiated auto insurance market in conjunction with a foreign nonlife insurer, Yasuda President Mikihiko Yamamoto told a news conference.
The venture will combine Direct Line’s expertise in offering risk-differentiated insurance with Yasuda’s brand name and broad customer base, executives of the two firms said. Yasuda is the nation’s seventh largest life insurer in terms of assets.
“(Direct Line) has a reputation for selling more than 2 million auto insurance contracts with at an incredible speed in the U.K.,” Miyamoto said at the news conference. “In direct sales of risk-differentiated insurance, the firm boasts great pricing knowhow” and enjoys a high level of customer satisfaction, he added.
Direct Line chief executive Ian Chippendale said that the timing is right for the firm — the largest private auto insurance provider in the U.K. — to enter the Japanese market.
“The market is deregulating, and we are joining at a time when the economy is making a strong recovery,” Chippendale said.
Sixty percent of the venture, which will launch next fall, will be owned by Yasuda, with the remainder to be held by Direct Line. The president of the new firm will be selected from Yasuda, which will also occupy four of the six-member executive board, Miyamoto said.
Miyamoto added that the venture firm hopes to sell 500,000 contracts in five years.
The joint venture will not compete with the existing nonlife subsidiary of Yasuda Life, Miyamoto said, noting that the new firm will focus on direct marketing while the nonlife subsidiary will sell products mostly through agencies.
Direct Line is a leading insurance company in the U.K., providing risk-differentiated insurance products solely through its call centers. The company took advantage of Britain’s “Big Bang” financial reform to become the country’s largest private automobile insurance company in just 10 years.
In 1994, the company formed a joint venture in Spain with a local firm to sell auto insurance there, the company officials said.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.