Dai-ichi Mutual Life Insurance Co. and U.S. insurer American Family Life Assurance Co. of Columbus on Thursday announced that they will tie up to cross-sell and jointly develop products.
The two have decided to cooperate in preparation for the January lifting of a ban on major domestic insurers from marketing the so-called third-sector products, such as cancer, medical and nursing care products, officials of the two companies said.
Under the agreement, Dai-ichi Mutual Life will market AFLAC’s cancer insurance and other products through its 50,000 sales staff and financial planners. AFLAC, meanwhile, will sell Dai-ichi’s life insurance policies through its 40,000 sales agents. The alliance will give the two access to a combined 22 million individual customers — the largest customer base in the industry.
The agreement also calls for joint development of life insurance products and sales methods, the officials said.
Thursday’s move, the first among a major life insurer and a U.S. insurer, might spark similar activities in the life industry, which is suffering from stagnant sales amid the still fragile economy and intensifying competition.
Top executives of the two firms stressed in a joint news conference that the alliance will allow them to beef up their product lines without interfering with the independence of each company.
“Our partnership with Dai-ichi Life confirms that we are positioned to maintain our dominance in the third sector by Dai-ichi Life’s endorsement of our strategy,” said Daniel Amos, president and CEO of AFLAC. “As we look forward to this new relationship, we are committed to improving our existing products and developing new products to meet the changing needs of the consumer.”
Dai-ichi’s Morita, meanwhile, explained that his company — the nation’s second largest life insurer — chose to ally with AFLAC because of the U.S. insurer’s strength in cancer insurance. AFLAC, based in Georgia, has a 90 percent share in Japan’s cancer insurance market.
But Morita added that the alliance does not mean that Dai-ichi has given up developing proprietary products in the entire third-sector business. “We are still in the process of mapping out our strategy for the third sector,” he said.
The third-sector business has largely been dominated by foreign players as a result of U.S.-Japan insurance talks, which agreed in 1996 that domestic insurers would be allowed to market third-sector products from January 2001 on condition that Japan implements a series of deregulation steps.
The latest development comes only 10 days after Dai-ichi announced a comprehensive alliance with Yasuda Fire & Marine Insurance Co., the second biggest nonlife insurer.
Dai-ichi and Yasuda have also agreed to sell each other’s products and jointly develop new products. The move was spurred by another deregulation measure decided in August to allow life insurers to cooperate with nonlife insurers in cross-selling of products.
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