Sompo, Japan's Third-Largest General Insurer, Differentiates Itself With Wellness Business

Market concentration is relatively high in Japan in property and casualty insurance. Three firms—Tokio Marine, MS&AD, and Sompo—together have 88% share, and only three others (AIG, the nonlife unit of an agricultural cooperative insurer, and Sony Assurance) have even 1%. Despite this high concentration, we do not think the three leading firms possess economic moats in Japan, as they offer comprehensive nonlife insurance products to all customer segments, not merely focusing on the most profitable or most attractive. Moreover, auto and fire policies sold to consumers, while deregulated since 1996, still must reference historical loss cost ratios in their pricing. Nonlife insurance in Japan (including the traditional business sold through agencies and direct business sold online) accounts for around 60% of Sompo's total earned premiums.