U.S.-Japan Trade: The Japanese Insurance Market (Briefing Report,
03/15/99, GAO/NSIAD-99-108BR).

Pursuant to a congressional request, GAO provided information on the
implementation of Japanese insurance agreements, as well as U.S.
government monitoring and enforcement efforts, focusing on the: (1) size
of the Japanese insurance market; (2) U.S. insurance company presence in
and concerns regarding this market; and (3) business, regulatory, and
other events that have affected the Japanese insurance market in the
1990s.

GAO noted that: (1) the Japanese insurance market is the second largest
insurance market in the world after the United States, with $334 billion
in annual premiums paid to insurance companies operating in Japan in
fiscal year (FY) 1997; (2) the Organization for Economic Cooperation and
Development reports that foreign market share grew in Japan, from 2.4
percent in 1990 to 3.7 percent in 1996, the most recent year for which
such data are available; (3) by comparison, foreign penetration of the
U.S. insurance market in 1996 was almost three times greater; (4) 13
U.S. majority-owned insurance companies operate in Japan, with 81
percent of the $10.961 billion in premiums generated by these companies
in FY 1997 attributable to two insurance providers--the American Family
Life Assurance Company of Columbus (AFLAC) and the American
International Group (AIG); (5) AFLAC is the largest U.S. provider of
niche insurance products (such as cancer insurance), and AIG is the
largest U.S. provider of standard life insurance and non-life insurance
products; (6) CIGNA is the next largest U.S. provider in the Japanese
insurance market, followed by Prudential Life Insurance Company,
Limited; (7) of total U.S. premiums, over 60 percent are attributable to
niche products, with AFLAC accounting for $4.582 billion, or 67 percent,
of U.S. niche product sales in FY 1997; (8) U.S. insurers in Japan are
concerned about the following issues: (a) Japan's degree of deregulation
of its market for standard insurance products; (b) Japanese firms'
increased activities in the market for niche products, (c) Japan's level
of transparency in approving new insurance products and making other
regulatory decisions; (d) the sufficiency of staffing of Japan's
regulatory offices; (e) Japan's handling of how insurance industry
contributions are being determined for a new fund to protect
policyholders from company failures; and (f) an impasse between the
United States and Japan over the timing of a grace period during which
U.S. and other insurers could gain a competitive foothold in important
segments of the Japanese insurance market; (9) several business,
regulatory, and other events have affected the Japanese insurance market
in the 1990s; and (10) in 1997, Japan agreed to include key commitments
contained in the 1996 agreement as part of its obligations under a World
Trade Organization financial services agreement.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-99-108BR
     TITLE:  U.S.-Japan Trade: The Japanese Insurance Market
      DATE:  03/15/99
   SUBJECT:  Competition
             Insurance regulation
             Foreign governments
             Foreign trade agreements
             Insurance companies
             International relations
             Insurance premiums
             Foreign trade policies
             International trade restriction
IDENTIFIER:  Japan
             

U.S.-Japan Trade: The Japanese Insurance Market (Briefing Report,
03/15/99, GAO/NSIAD-99-108BR).

Pursuant to a congressional request, GAO provided information on the
implementation of Japanese insurance agreements, as well as U.S.
government monitoring and enforcement efforts, focusing on the: (1) size
of the Japanese insurance market; (2) U.S. insurance company presence in
and concerns regarding this market; and (3) business, regulatory, and
other events that have affected the Japanese insurance market in the
1990s.

GAO noted that: (1) the Japanese insurance market is the second largest
insurance market in the world after the United States, with $334 billion
in annual premiums paid to insurance companies operating in Japan in
fiscal year (FY) 1997; (2) the Organization for Economic Cooperation and
Development reports that foreign market share grew in Japan, from 2.4
percent in 1990 to 3.7 percent in 1996, the most recent year for which
such data are available; (3) by comparison, foreign penetration of the
U.S. insurance market in 1996 was almost three times greater; (4) 13
U.S. majority-owned insurance companies operate in Japan, with 81
percent of the $10.961 billion in premiums generated by these companies
in FY 1997 attributable to two insurance providers--the American Family
Life Assurance Company of Columbus (AFLAC) and the American
International Group (AIG); (5) AFLAC is the largest U.S. provider of
niche insurance products (such as cancer insurance), and AIG is the
largest U.S. provider of standard life insurance and non-life insurance
products; (6) CIGNA is the next largest U.S. provider in the Japanese
insurance market, followed by Prudential Life Insurance Company,
Limited; (7) of total U.S. premiums, over 60 percent are attributable to
niche products, with AFLAC accounting for $4.582 billion, or 67 percent,
of U.S. niche product sales in FY 1997; (8) U.S. insurers in Japan are
concerned about the following issues: (a) Japan's degree of deregulation
of its market for standard insurance products; (b) Japanese firms'
increased activities in the market for niche products, (c) Japan's level
of transparency in approving new insurance products and making other
regulatory decisions; (d) the sufficiency of staffing of Japan's
regulatory offices; (e) Japan's handling of how insurance industry
contributions are being determined for a new fund to protect
policyholders from company failures; and (f) an impasse between the
United States and Japan over the timing of a grace period during which
U.S. and other insurers could gain a competitive foothold in important
segments of the Japanese insurance market; (9) several business,
regulatory, and other events have affected the Japanese insurance market
in the 1990s; and (10) in 1997, Japan agreed to include key commitments
contained in the 1996 agreement as part of its obligations under a World
Trade Organization financial services agreement.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-99-108BR
     TITLE:  U.S.-Japan Trade: The Japanese Insurance Market
      DATE:  03/15/99
   SUBJECT:  Competition
             Insurance regulation
             Foreign governments
             Foreign trade agreements
             Insurance companies
             International relations
             Insurance premiums
             Foreign trade policies
             International trade restriction
IDENTIFIER:  Japan