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Need cash? Small amount, short term insurance plans gaining market momentum

After a 2006 revision to the Insurance Business Act, the number of insurers offering "small amount and short term insurance" plans with low premiums and payouts is set to reach 100 companies as early as this summer, signaling both the popularity of the unique system catering to diverse lifestyles as well as the system gradually carving out a market niche.

In recent years, major life and damage insurance firms have begun entering the small and short plan field, raising awareness of the existence of the system. According to the Small Amount & Short Term Insurance Association of Japan (SSI), the number of registered businesses offering the "small and short" plans jumped from 64 companies in 2008 to 97 by the end of 2017. There are already several companies that have entered the preparation stage, meaning that the number of firms is set to reach 100 as early as summer.

The most popular by insurance type is household article insurance, offered by 46 companies and boosted by the growing enrollment of real estate companies. Life and medical insurance came in second with 32 firms offering policies and pet insurance in third with nine companies. The plans are mainly spread through sales on the internet or at representative agencies, with an insurance premium income in fiscal 2016 of 81.5 billion yen -- a 12 percent rise from the previous year for 60 percent growth over the last five years.

One element behind the popularity of the insurance plans is their uniqueness not found among the products offered by major firms. Japan Small Amount & Short Term Insurance Co. offers a "false molestation accusation insurance" plan. Under the insurance, if the contracted individual is suspected of molestation on a train or in other places, an emergency message is sent out to the nearest lawyer via a smartphone or other device and the expenses for that lawyer within 48 hours from the time of the incident will be completely covered.

Meanwhile, AWP Ticket Guard Small Amount & Short Term Insurance Co. covers the cost of event tickets if the customer is unable to attend due to circumstances such as sudden illness or transport delays. There is also motorcycle insurance specifically for Harley-Davidson bikes.

On top of low income from insurance premiums per customer, the limited number of people interested in these specialized policies has kept the plans out of the reach of insurance giants. However, as some of the insurance policies have become a big hit in recent years, larger companies can no longer afford to ignore the trend.

Aiaru Shogaku Tanki Hoken (small amount and short term insurance) Corp.'s "lone death insurance," which provided cleaning costs and other compensation to property owners if a renter living alone died, caused a stir when it went on the market in 2011, prompting insurance heavyweights such as Tokio Marine & Nichido Fire Insurance Co. to also offer the same product. Funeral insurance, with a payout of several hundred thousand yen, is also expanding throughout the market to major firms.

There are now examples of major firms developing "on-demand insurance" that provides the needed funds precisely when the enrolled person needs it and other such personalized products that have until now been limited to only small insurers. At the close of 2017, it was revealed that Dai-Ichi Life Holdings Inc. was considering buying Aiaru Corp. There is a possibility that large life and damage insurance companies will enter the small amount and short term insurance market and grab market share from minor insurers.

Small Amount & Short Term Insurance Association of Japan board of directors chairman Shoji Sugimoto commented, "With flexible ideas and mobility that major firms lack, we would like to understand and meet the needs of changing lifestyles."

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