Another fine mess

Article Abstract:

The Japanese life insurance industry has been hit by investment losses, and public funds may be needed to deal with the problem. The Japanese market accounts for 40% of the market world wide, and is bigger than that of the US, partly because of the savings habits of the Japanese. The market is saturated and a cheap female labor force of salespeople is no longer available. Guaranteed fixed rates of return cannot be matched by long term government bonds,since few are available with a life of over a decade, so other assets such as real estate have been used, and the fixed rates cannot be met with these assets.

Industry Overview

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Passing the buck

Article Abstract:

Japanese life insurers have been affected by a drop in interest rates which means that it is difficult to pay returns based on previous high yields. There is concern about the financial strength of some insurers, though stronger insurers have been merging with banks. There is little scope for growth through mergers due to saturation of the market. Some smaller insurers have been acquired by foreign companies. A compensation fund set up by the industry is not likely to raise enough. The government could use public funds, but is proposing changes to policies allowing lower returns on policies.

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