I’ve been reading a little bit of a book called Q&A 日本経済 100常識 (or roughly ‘100 pieces of common sense about the Japanese economy, the 1999 edition), and a little bit of other Japanese economics and one thing that cums up that I don’t see come up much in English economics is the importance of insurance companies. They focus a lot it seems on the links between banks, brokers, and life insurance.
I asked a friend about why this is, and what he told me was that basically when it comes to life insurance, there are two types. A ‘term type’ (掛け捨て型 which roughly means ‘failure to pay’ or ‘to throw away an obligation) and a ‘savings type’ (積立型 which is pretty literal). Under the term type, you pay a certain, usually small amount, to the company in exchange for an insurance plan, and when you choose to cancel that’s the end, but with the savings type, you pay a larger amount, but when you cancel the plan, the money comes back to you.
In order to make money under the savings type, the insurance company invests using the money earned.
Another reason why it might be important might just be the dates of the things I’ve been reading. Alot of it is stuff from the mid to late 1990s and there were some regulations that included removing the ability of banks and brokers from having insurance companies as subsidiaries.
I might write on here if I learn anything else that’s interesting.
one interesting thing I read was a report from Swiss RE about the history of insurance in Japan
