American Family Life Assurance Company (Aflac) is a good example of a foreign company noticing a trend, taking the right actions to gain a major share of its revenue from Japan according to an article of Fast Company magazine. Did you know that the Aflac generates over 70% of its revenues from its Japanese operations? Aflac has become the market leader for cancer related life insurance in Japan.
The family run company was founded by three brothers in a small town in Georgia USA after the World War II. This success in Japan can be traced back to an insight derived from simple mathematics. The president of Aflac Daniel P. Amos explains in the interview with Fast Company magazine: In the early 1970s they realized that Japanese were living longer and dying from different reasons than before. The causes of deaths from cancer grew dramatically, creating for Japanese a new concern that some kind of cancer epidemic might be emerging. The fact is that there was not an epidemic, but as in 1974 the life expectancy had increased from about 58 to 84, people were just living long enough to get cancer. This growing awareness of cancer built a demand for a new type of insurance.
Aflac became the first company to be licensed after the war in Japan with two basic insurance markets: the non-life and the life. Aflac developed a cancer insurance policy in the 1970s… It paid X amount if you died for any reason, but if you died of cancer, it paid ten times that amount. With this new type of insurance Aflac convinced the Japanese government to give them a temporary monopoly. For seven years, Aflac would be the only insurance company that could sell cancer insurance in Japan. These seven years gave Aflac enough of an advantage that, even decades after the Japanese government removed Aflac’s monopoly protection, the company held on to nearly the entire market. In 1992, when the company changed its name from American Family Life Assurance Company to Aflac, its market share was at 94%.
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