Market Line Insurance - Decline In Overall Market

Market Line Insurance

In October 2006, the in-force value of private individual life insurance policies in Japan hit an 18-year low, falling below US$10 trillion for the first time since March, 1990. This was primarily the result of a severe downturn in the traditional life insurance market, including whole life, term life, and endowments. Because this segment had accounted for over 50 percent of gross premium from non-Japan Post insurance, its decline created a significant drop in the total market size. Factors driving this downward spiral include a shrinking addressable population, market saturation, and shifting customer demand towards such alternative products as mutual funds.

Shrinking Addressable Market

Japan's 2012 population is projected to be 127.2 million, approximately 0.6 million less than in 2007. While this does not sound like a big difference, the population comprising life insurers' primary addressable market, that is those between ages of 15 and 64, is projected to be only 80.3 million in 2012, a drop of 3.5 million or 4.3 percent from 2007. At the same time, the population of all those over the age of 65 is expected to increase by four million people. With a shrinking population and a demographic trend that is not in favor of life insurance, the traditional life insurers' addressable market is steadily declining.