Insurance companies have turned to promoting affordable policies for young people in an effort to encourage them to buy cars.
An increasing number of young people in Japan have been losing interest in owning cars, with some citing high insurance premiums as a reason, industry officials said.
In response, insurers have successively introduced policies targeting young car owners, lowering premiums for those taking out auto insurance for the first time.
Sompo Japan Nipponkoa Insurance Inc. has widened premium discounts on collision coverage under its mainstay car insurance product for those purchasing insurance for the first time with a brand new car.
As young people account for a large part of first-time insurance buyers, “We are seeking to encourage them to buy cars by reducing the financial burden for them to sign up for collision coverage,” a Sompo Japan official said.
The number of insurance contracts since January, when the wider discounts became available, has continued to increase about 5 percent year-on-year, the official added.
Young and first-time drivers usually pay higher premiums as they are deemed by insurance companies to be inexperienced and high-risk drivers.
But a decline in car ownership by young people is not only eating into auto sales but also dealing a blow to casualty insurance companies, or nonlife insurers, in Japan.
A 2017 online survey by Sony Assurance Inc. found that while 56.3 percent of 500 men and 500 women who came of age in fiscal 2016 have driver’s licenses, only 16.8 percent own a car.
It found 48.9 percent of the respondents were interested in cars, but 68.4 percent said they could not afford one.
Aioi Nissay Dowa Insurance Co. has introduced a new car insurance product targeting young drivers, offering only the least necessary coverage with lower premiums.
Premiums for the new insurance are about 10 percent lower than mainstay policies with more extensive coverage, a company official said.
The insurer also introduced a temporary car insurance product, targeting young drivers who do not own a car but occasionally drive a rental car or their friend’s car.
The “One Day Support” policy is one-day insurance, available for ¥500 without collision coverage and ¥1,500 with the coverage.
Aioi Nissay said it hoped users of the temporary insurance product will eventually purchase regular insurance products when they own a car.
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