Japan: Insurance Industry - Coming Out of the Shell

The process will be gradual, but financial deregulation is stimulating competition in Japan's insurance industry. Insurers insist a overhaul is not needed since they are already doing a good job of managing the savings of their policyholders. The companies are averse to risk and prefer stable,...

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Bibliographic Details
Published in:Far Eastern economic review 1989-12, Vol.146 (50), p.66
Main Author: Danker, Stella
Format: Magazinearticle
Language:English
Subjects:
Competition
Insurance industry
Insurance policies
Life insurance companies
Manycompanies
Pension funds
Policyholders
Portfolio management
Property & casualty insurance
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Summary:The process will be gradual, but financial deregulation is stimulating competition in Japan's insurance industry. Insurers insist a overhaul is not needed since they are already doing a good job of managing the savings of their policyholders. The companies are averse to risk and prefer stable, long-term profits to high-risk or high-return fund management. Change is coming to the industry from several directions: 1. Once the pension law is amended by parliament, life insurers are expected to lose the right they currently share exclusively with trust banks to manage corporate pension funds. 2. Life insurers will have to bear the gains and losses on each of their investments at the end of March 1990 for the first time in 14 years. 3. The Ministry of Finance's Insurance Council is considering changes to the insurance law that would allow life and casualty insurers to offer similar products. 4. The deregulation of interest rates throughout the financial markets is alerting policyholders to the returns on their insurance policies.
ISSN:0014-7591
1563-9339