The Development of the Mutual Form and Its Influence on the Life Insurance Industry

YingYing Jiang

in Corporate Forms and Organizational Choice in International Insurance

Published in print November 2015 | ISBN: 9780198739005
Published online December 2015 | e-ISBN: 9780191802157 | DOI:
The Development of the Mutual Form and Its Influence on the Life Insurance Industry

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This chapter provides a comparative analysis of the mutual form based on the evidence from the pre-Second World War Japanese life insurance industry, with a focus on marketing strategy and corporate governance. We find that the factors responsible for the success of the mutual companies can largely be attributed to the intensive publicity given to mutualism and the high-premium high-dividend product policy adopted in their sales strategies. This suggests that the mutual form can be an effective solution to the problem of contract failure inherent in the long-term life insurance policy, especially in a nascent market where the asymmetric information problems may be more severe. However, the mutual form tends to have a weak management control system. Poor corporate governance impedes the development of mutual form in the life insurance industry. Only those companies with powerful founders and/or managers can achieve sustainable success.

Keywords: life insurance; organizational form; marketing strategy; corporate governance; Japanese insurance industry

Chapter.  10189 words. 

Subjects: International Business ; Business History

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