The Non-Life Insurance Rating Organization of Japan has submitted to the Commissioner of the Financial Services Agency (FSA) a revision of the reference net premium rates for overseas travel accident insurance. This is the first change in about 10 years, since March 2016.
In recent years, insurance benefits for injury treatment expenses and sickness treatment expenses have increased sharply, and the depreciation of the yen has pushed up the yen-converted amount of foreign-currency-denominated medical costs. Rising medical costs in many countries are also cited as a factor. The average insurance benefit paid per person has increased by about 1.5 times over the past 10 years.
As an example of the revision rate for a policy with contract conditions of 20 million yen for accidental death and residual disability, 10 million yen for death due to illness, and 100 million yen for injury and illness treatment expenses and rescue expenses, the rate for a 4-day trip will decrease by 33.4%, while the rate for a 7-day trip will increase by 50.4%.
The reference net premium rate is composed of the pure premium rate, which is allocated to insurance benefits paid by insurers, and the loading premium rate, which is allocated to insurers’ expenses and other costs. The Non-Life Insurance Rating Organization of Japan calculates the reference net premium rate as a reference figure for the pure premium rate and provides it to its member insurance companies. Based on the Act on Non-Life Insurance Rating Organizations, the Financial Services Agency conducts a conformity review.
The standard premium rates actually used when each insurance company sells products may be revised independently by each insurer in terms of content, timing, and frequency, based on its own income and expenditure situation and risk profile. In addition, the loading premium rate is determined individually by each insurance company.
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