Life Insurances In Japan

Japan's life insurance industry has followed a relatively static period for the decade and is experiencing deregulation and market entry by foreign firms presently. A struggle for survival is taking place among Japanese and foreign life insurers in the "third sector" of Cancer, medical and long-term cares insurance. Though there are extremely high levels of financial assets held by Japanese households, still there is a plenty of room for Innovative ideas in the market.

Survey by the Japanese Institute of Life Insurance (JILI) in 2003 has reported that 89.6% of total households have life insurance policies. Among these households, the average number of policies (including individual annuities) came to 4.3 and total annual insurance premiums amounted to ¥531,000, making Japan one of the world's largest insurance markets. Between roughly 1996 and the start of the year 2005, a time of extremely low interest rates and stagnating stock prices due to the collapse of Japan's asset-inflated "bubble" economy, domestic life insurance companies saw their financial situations deteriorate rapidly as their asset investments fell short of the guaranteed yields promised to policyholders. In the same time, poor economic conditions encouraged individuals not only to stop buying new policies, but also to cancel or not renew existing policies. In response, life insurers began restructuring through moves. Of the 31 names listed as members in the Life Insurance Association of Japan in 1996, only 15 of these companies remained in 2005 (although total membership had risen to 39). The other 16 companies either changed their names due to a merger or acquisition, or went bankrupt. Individual insurance in force declined from a peak of ¥1,495 trillion in the fiscal year ending March 1997 to ¥383 trillion in March 2005.

Health Insurance In Japan

Employees Health Insurance system (Occupation-based insurance) Peoples coming under this type of insurances are employees and their dependents mainly. All employed persons are required to join the association, except those who are employed by private firms with less than five employees and self-employed.

Association-managed Health Insurance program is operated by a health insurance association organized by large firms for their employees. Sometimes more than one firms form a single association

Government-managed Health Insurance is for the employees of small and medium scale firms, which cannot form health insurance associations on its own. The Government provides a collective health insurance for them, with contributions from the employers and employees.

Laborers Health Insurance is for day-laborers, i.e. mainly those persons who are employed on a day-to-day basis, those employed for a fixed term of less than two months, those are employed for seasonal work and those who are employed at temporary workplaces. Due to their unstable relationship with employers, the Government provides a collective health insurance, for which contributions are collected on a day-to-day basis from both employers and employees. Other occupation-based health insurances are as follows

• Seamen's Insurance
• National Government Employees' Mutual Aid Association
• Local Government Employees' Mutual Aid Association
• Private School Teachers and Employees' Mutual Aid Association

The first one is operated by the Government, and the other threes by each mutual-aid associations.

National Health Insurance

This program mainly covers to all those who are not covered by the Employee's Health Insurances, i.e. self-employed, farmers, students, and so forth, including all legal foreign residents. The insurers are generally municipalities except for the National Health Insurance Associations.
Retirees who previously subscribed to Employees' Health Insurances are insured under the National Health Insurance. Health care cost for the retirees in the age of 60-70 is financed by the transfer from the Employees' Health Insurance, i.e. retiree's former insurer.

The National Health Insurance is financed by Government subsidy as well as insurance premiums are paid on household basis. The premiums can be discounted up to 60% for low-income households.

Health Service System for the Elderly

Previously, health insurances for the elderly were covered by the National Health Insurances. As a result of an increasing aging, this arrangement has led to an unbearably heavy burden on the National Health Insurance. Thus, a special financial arrangement was made for those aged 70 and over, and those between 65 and 70 years old who are bed-ridden or have severe disabilities. Under this scheme, the elderly have access to health services at a nominal fee per visit (in case of out-patient) and per day (in case of hospitalization) and their health care costs are met by the subsidy from the central and local Governments (30%) and the transfer of contributions from the National Health Insurance and the Employees' Health Insurance (70%).

Social Insurances for the Self Employed in Japan

Huge sector of the working population that makes Social Insurance contributions is that of self-employed peoples. This generally includes company directors, professionals, small-business peoples, contractors, and often, part-timers. These people hardly make up about 25% of the workforce in Japan. The government is now cracking down on this sector, but because of the unique nature of Social Insurance. The Social Insurance program is broken up into 3-4 payments if you are an employee: Health (Kenko Hoken), Pension (Kosei Nenkin), Unemployment (Koyo Hoken), and Nursing Care (Kaigo Hoken). An employee receiving a salary of JPY500, 000 a month can expect to lose a massive JPY50-60, 000 in pension contributions and another JPY30-40, 000 in health contributions.

Universal health care and public insurance

Japan's medical services are provided by public mandatory insurance programmes, which is run by two systems like occupation-based and region-based. The former is called Employee's Health Insurance. Employers of firms of a certain size and over and their employees form a health insurance association and thus these are called Association-managed Health Insurance. The number of the associations are more than 1,800. For those who work at smaller firms, the government provides a collective health insurance, which is called Government-managed Health Insurance. Those who are not covered by the Employees' Health Insurance are required to participate in a region-based insurance, called the National Health Insurance, for which the municipalities (more than 3,000) act as the independent insurers.

The public health insurance with universal coverage was established in 1961 concurrently with the introduction of the universal public pension.

Deposit Insurance Corporation of Japan

DICJ is a semi governmental organization, which was established in 1971 for the purpose of operating Japan's deposit insurance system in line with the Deposit Insurance Law. The organization following the recommendation of a Financial System Research Committee report stressed the need to create a system aimed at protecting depositors, and indicated basic directions to this end

The objective of the Deposit Insurance Law is defined as: To protect depositors by reimbursing insured depositors and purchasing deposits and other claims according to the necessity.

To establish a system of arrangements for appropriate financial assistance in mergers and other transactions involving failed financial institutions, public management by financial administrators, transfer of the business of failed financial institutions, and measures for management of financial crises, etc., thereby contributing to the maintenance of the financial system.