Merging of Major Nonlife Insurance Firms: Take Lead in Departing from Harmful Outdated Practices in The Industry

Editorial

15:00 JST, April 6, 2025

Collusion that undermines healthy competition has become the norm under the oligopoly in the nonlife insurance industry, and illicit incidents have occurred frequently. The new company that will be born through large-scale reorganization must take the lead in breaking with harmful outdated practices.

Mitsui Sumitomo Insurance Co. and Aioi Nissay Dowa Insurance Co., both of which are under the umbrella of the major nonlife insurance company MS&AD Insurance Group Holdings, Inc., have decided to merge with a target date of April 2027.

This will be a major corporate reorganization involving the third- and fourth-largest companies in the nonlife insurance industry. The new company is expected to become the largest in the industry, with net premiums written — equivalent to sales — of about ¥3 trillion, exceeding those of Tokio Marine & Nichido Fire Insurance Co.

Mitsui Sumitomo Insurance has many business dealings with companies that have their origins in former zaibatsu business conglomerates. Aioi Nissay Dowa has close ties with such companies as Toyota Motor Corp. and is strong in the field of automobile insurance for individuals. The new company should improve the efficiency of its management while also focusing on providing high-quality nonlife insurance services.

Until the late 1990s, there were over 10 major and medium-sized nonlife insurance companies. In the 2000s, they were reorganized into five groups, and now there are four major companies. The latest reorganization will result in the industry being consolidated into three companies.

Fundamentally, industry reorganization is a move to utilize the strengthened management base to develop high-quality products and services. However, scandals have occurred one after another in the nonlife insurance industry in recent years, as if pus developed over the years under the skin, and the industry is far from what it should be.

In addition to forming a cartel over insurance for businesses, they also leaked large amounts of policyholder information to other nonlife insurance companies through insurance agents. As a result, the four major companies were slapped with administrative punishments.

Behind this is the fact that under the oligopoly, collusion grew within the industry. Companies were so preoccupied with maintaining their market share that they neglected compliance.

If the new company will not just pursue the benefits of size through mergers, but also work on developing new customer-oriented products, it can be expected to depart from collusive practices.

Areas where new insurance products are needed will continue to expand including climate change, cyberattacks and autonomous driving, which is expected to spread. It is important to analyze the needs of customers and connect that analysis to developing insurance.

The environment surrounding the industry is severe. The domestic market for mainstay automobile insurance is shrinking due to the declining population. Natural disasters are increasingly severe, and insurance payouts are also increasing, putting pressure on profits. Developing new markets through such means as the acquisition of overseas nonlife insurance companies is also a difficult task.

Nonlife insurance is extremely important for supporting corporate management and individual lives in the event of unforeseen circumstances. The major nonlife insurance companies need to use this reorganization as an opportunity to be reminded of the heavy responsibility they bear.

(From The Yomiuri Shimbun, April 6, 2025)