With the number of daily confirmed COVID-19 cases in Japan reaching new highs, fanned by the rapid spread of the Omicron variant, Japanese insurers have seen predictably robust demand for COVID insurance policies.
As a case in point, Sompo Japan Insurance which began selling COVID insurance policies in December 2020 had sold more than 100,000 policies as of 25 January, and 200,000 by 1 February.
Most medical insurance policies’ premiums and pay-outs are calculated based on forecasts of the number of policyholders expected to become infected. But COVID-19 has been anything but predictable.
With 4,091 confirmed cases reported on 1 January 2021 (based on WHO data), most would understandably think, when the number of daily cases began to drop after peaking at 26,050 on 27 August 2021 all the way down to a modest 490 on 31 December 2021, that the worst was over.
But when Omicron hit Japan’s shores, the numbers jumped steeply in January 2022, reaching a current record high of 100,949 on 06 February 2022.
Japanese insurer Taiju Life Insurance announced on 3 February that it would stop selling its COVID-19 insurance product, just six weeks after it was launched on 21 December. Around 57,000 customers who have already bought the policy will remain insured, the insurer said.
“The number of infected people has exceeded our expectations, so we have no idea when we will resume sales,” said a Taiju Life Insurance official.
A subsidiary of Dai-ichi Life Insurance has taken a different approach, opting instead to raise premiums for COVID insurance in February to almost four times what it was in January.
With nearly half of respondents in Asia to a recent survey indicating they expect COVID-19 to last another year or more, the insurance industry in the region and beyond appears to have to continue striking a balance between meeting strong demand for coverage and managing risk.