Insurance Industry Trends in Japan, Part 2: New Sales Channels — Challenges and Solutions

by Eiichiro Yanagawa, May 15, 2014
Asia-Pacific

Abstract

Japan is in the midst of a demographic transition that has immense implications for the domestic insurance market. With a population that is both shrinking and graying, insurers face a contracting market and need to cater to an aging clientele, trends that are seen prompting reorganization in the market. 

Celent offers three proposals, all of which can be advanced with digital means, to help insurers and insurance technology vendors to thrive in this new era.

  1. Enhance modularization capabilities and decouple product creation from sales.
  2. Enhance capacity to respond socially and locally through differentiation via an omnichannel approach.
  3. Enhance cost-adaptability through self-service, efficiency, and simplification of processing operations.

“Japan’s insurance industry has taken a passive and reactive approach when it comes to sales channel change, acting primarily in response to external factors,” says Eiichiro Yanagawa, Senior Analyst with Celent’s Asian Financial Services group and author of the report. “However, this type of reactive approach is insufficient when it comes to solving the shared challenges faced by Japan’s insurers; a wealth of core issues inherent to the sales channel remain to be resolved.”

For insurers to thrive in the coming era, Celent believes that the below three points will play an integral part in company strategies and stresses the importance of innovation. 

  1. Efficiency of systems.
  2. Enhanced synergy and profitability fueled by diversification of operations.
  3. Making forays into expected growth areas and overseas markets.

This report is the second of two. In Part 1, Celent provided a bird’s eye view of Japan’s position in the global and Asia-Pacific insurance markets before examining the growth potential of the life and nonlife insurance sectors and the evolution of insurance products and channels. We then considered related changes in the business environment, competitive pressures, and business strategies.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Shared System Promoting Channel Diversification

3

 

The Background of Shared Systems

3

 

The Advent of Shared Systems

3

 

Case Study: e-JIBAI Compulsory Automobile Liability Insurance Shared System

5

Future of New Channels

7

 

Bank Sales Channels

7

 

Brick-and-Mortar Insurance Shops

9

 

Online Sales

10

Challenges and Solutions

12

 

Core Challenges Inherent in Sales Channels

12

 

Fundamental Change of Sales Channels

13

 

Impact of a Contracting Market

13

 

Capacity to Respond to Change

15

 

Responding to Change with Digital Technology

17

Conclusion: Accelerating Innovation

22

 

The Limits of a Reactive Approach

22

 

From Sales Channel Diversification to Business Model Diversification

22

 

Toward Intentional Innovation

23

 

Innovation Portfolio Model

23

Leveraging Celent’s Expertise

25

 

Support for Financial Institutions

15

 

Support for Vendors

25

Related Celent Research

26

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