Five Products in Four Years, in One of the World’s Most Conservative Markets

Japan, Gilad noted, is a land of contradictions: conservative and hierarchical, yet innovative, mobile-first and full of people who will go out of their way to be helpful. Its insurance industry reflects that culture, and yet the Japanese insurtech sector is thriving. Kazy Hata, founder and CEO of Just In Case, is one of Tokyo’s first insurtech entrepreneurs.

About Kazy Hata

Kazy Hata has more than 15 years of insurance-related experience. He started at the actuarial consulting firm Milliman, worked at global investment banks including JPMorgan and Nomura providing risk management and product development services to insurers, and later worked in product development at a reinsurer (Munich Re). In 2016 he founded Just In Case, Japan’s first insurtech insurer. The company has been in operation for about four years, with five distinct products and three business models.

Why Build an Insurer

At the reinsurer, Kazy’s job was to originate business, but bringing a product from Germany or the US to a top-tier Japanese insurer took about two years, a source of great frustration. His answer was to do it himself. The key was a license unique to Japan, a small-amount, short-term insurance license that has existed only about ten years, which lets a company write both life and non-life, with limits. The other advantage was being an IT startup: engineers and designers inside the company, which is normal for a startup and unusual for an insurer.

The company was founded close to four years earlier but opened for business only two years earlier, after spending about 18 months to two years negotiating its underwriting license. Now it can launch a product in about three months, and its COVID insurance took literally one month. Its limits are real: it can’t do investment products like variable annuities.

The Five Products

1. Smartphone repair insurance. The first, a data-driven product comparable to AppleCare, in which sensor data from the phone assesses how risky the user is. Safer users get a bigger discount at the quarterly renewal. Kazy believes it was the first time a machine-learning formula was implemented in an actuarial pricing mechanism in Japan.
2. Leisure and accident insurance. A one-day on-demand product, provided through an API to a partner app with millions of users, initially Dai-ichi Life’s app and later a loyalty-points app, covering things like cycling and mountain climbing. Domestic travel, boosted by a government subsidy campaign, is a growth area.
3. Peer-to-peer cancer insurance. Called Warikan Hoken, inspired by Alibaba’s Xiang Hu Bao, which Kazy and his team decided within days to import.
4. COVID insurance. Developed in April and May 2020.
5. A walking-based medical insurance. The more steps a customer walks, the larger the discount at the next monthly period, with BMI as the other main driver besides age and gender. It covers cancer and diabetes, and the data came from a shareholder, DeNA, the gaming company, which took a long time as large-company collaborations do.

Importing Peer-to-Peer Insurance

Kazy first tried a peer-to-peer smartphone insurance three years earlier, after seeing a UK broker-MGA model, but the Financial Services Agency said no after about six months. Then Alibaba’s product appeared, and the Cabinet Office had just launched a regulatory sandbox, so the team negotiated there instead, a long and strategic process: nothing in Japanese law prohibited it, but nothing said it was allowed. The whole effort took about a year from first seeing the idea in China.

Gilad explained Xiang Hu Bao for listeners: it runs inside Alipay for critical illness, Kazy said, with on the order of 200 million users, close to 20 percent of China’s population, and it costs about a third of existing products. It is post-paid: if no one in the group gets cancer, no one pays; if one person does, the cost is shared among the rest, and a diagnosis document is published in the app so members can check for fraud. Alibaba doesn’t aim to monetize it directly, but uses it to upsell.

Kazy’s version differs for law and culture. Japan’s privacy rules mean it can’t publish personal information, so claims are anonymous (for example, a woman in her 40s received a claim for breast cancer, and this is each member’s share), and the insurer does the fraud checking as an underwriter. The most distinctive part is that members voluntarily send messages of support to the person who received a claim. The team thinks of it as fundamentally good-based, where people want to be helped but want to help more, a contractual form of crowdfunding that satisfies both the “left brain” (cheaper, reasonable) and the “right brain” (you’re helping others).

The B2B Opportunity

Because it can build products fast on AWS, Just In Case spun up a second company, Just In Case Technologies, to sell insurance software as a service to other insurers, with Kazy as CEO of both. Insurers want that speed, particularly after COVID changed the importance of the internet channel. Investors are comfortable. The two businesses complement each other: because of its license, Just In Case can sell only one or two products to a single customer, and can’t offer savings or mortality protection, so it can become a distributor of other insurers’ products for upsell, and those insurers don’t see it as a pure competitor.

Working With Japanese Insurers

When Just In Case came out of stealth three years earlier, almost no insurer had a digital or innovation department, so it was hard to know whom to talk to. Now nearly all have a digital transformation or innovation office with real internal power. Kazy also thinks face-to-face distribution will survive for a long time, Gilad added, recalling a Japanese insurer president who told him he had 180,000 agents, but face-to-face is itself going online, with video meetings and digital signatures, and regulation is changing too. Just In Case is working on a project to help those channels go online.

What Foreigners Should Know

Kazy’s advice for US and European insurers and startups: Japan isn’t a global, cross-border business, and big corporates react slowly. The best approach is partnership with local players, or it will be a time-consuming loss.

Key Takeaways

• A small-amount, short-term insurance license let Just In Case write both life and non-life in Japan, with limits, after about two years of license negotiation.
• The company now launches products in about three months, and built COVID insurance in one month.
• Its five products include behavior-priced smartphone insurance, API-delivered leisure insurance, peer-to-peer cancer insurance, COVID cover and walking-based medical insurance.
• The peer-to-peer product was imported from Alibaba through the Cabinet Office sandbox after the FSA rejected an earlier attempt, with changes for privacy and culture such as anonymous claims and supportive messages.
• A B2B arm, Just In Case Technologies, sells insurance SaaS to insurers that want faster product launches.
• For foreign companies, Kazy’s advice is to partner with locals, because Japan is not a simple cross-border market.