In a demonstration of intensifying competition in the insurance industry, a company announced Friday what it is hawking as the world’s first savings-oriented auto insurance. Just 30 minutes later, another firm introduced an identical product.
Nippon Fire & Marine Insurance Co., unveiled a multiyear auto-insurance policy that guarantees policyholders repayment of premiums when their policies mature, even if they had accidents while covered by the insurance.
Conventionally, auto insurance has been sold on a yearly basis with no repayment of premiums. Policyholders, therefore, have had to renew policies every year, and if they have an accident, their premiums are jacked up the following year.
By extending the term of the policy to a maximum of five years, administrative costs incurred by policy renewals are eliminated and premiums can be invested over the long term, Nippon Fire & Marine officials said.
Premiums will not be hiked even if policyholders have accidents during the contract period, and will receive a repayment of up to 300,000 yen at the end, according to the firm.
It was the only policy of its kind — for a little while.
Thirty minutes later, Tokio Marine & Fire Insurance Co., Japan’s biggest nonlife insurer, announced it will also sell auto insurance with a fixed repayment guarantee. The contract period for the Tokio Marine product is either two years or three years.
“It’s a great deal for drivers who have many accidents,” quipped Toyoaki Ando, head of the auto-insurance product development group at Tokio Marine.
Ando added that his firm has worked on savings-oriented auto insurance for 20 years.
Competition has been heating up in the auto insurance market since premium rates were deregulated in the summer of 1998.
Many firms have come up with new products that feature improved service and lower premiums. Some direct auto-insurance providers, many of which are foreign companies, have slashed rates by as much as 30 percent off the norm.
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