Dwindling rates affects life insurers in Japan

Plunging long-term interest rates triggered by the Bank of Japan's negative-rate policy will force life insurers into tough decisions, according to the head of the industry association.

With government bond yields on the decline, providers are starting to look at “lowering guaranteed policy yields and ending sales of insurance products,” said Yoshinobu Tsutsui, chairman of the Life Insurance Association of Japan, in a press conference.

Fukoku Mutual Life Insurance already plans to discontinue some lump-sum whole-life policies. Nippon Life Insurance, where Tsutsui serves as president, may take similar steps, he said.

With the prospect of dwindling interest income from Japanese government bonds, insurers will have to diversify to such other investments as foreign and corporate bonds, Tsutsui said.