Potential Approaches to Further Growth in the Housing Defect Warranty Insurance September 10, 2014 Tokio Marine & Nichido Fire Insurance Co., Ltd.
PotentialApproachestoFurtherGrowth intheHousingDefectWarrantyInsurance September10,2014 TokioMarine&NichidoFireInsuranceCo.,Ltd. 1 IntroductionofTokioMarineGroup North America Vancouver San Francisco Los Angeles Honolulu Toronto Chicago Atlanta Amsterdam Brussels London Other important locations St.Petersburg Moscow Dusseldorf Paris New York Bala Cynwyd Barcelona Istanbul Nashville Milano Kuwait Jeddah Asia Beijing Al Khobar Manama Seoul Tokyo Shanghai Taipei Shenzhen Hong Kong Manila Guam Hanoi Dubai Riyad New Delhi Mumbai Yangon Mexico City Cities with expatriate staffs Europe/Middle East South America Sao Paulo Ho Chi Minh City Jakarta Bangkok Kuala Lumpur Singapore Sydney Melbourne 37 countries / 456 cities 44,000 employees As of March 2013 2 Today’sAgenda 1. Housing Defect Warranty Insurance Market in Japan 2. Our Suggestion for Sound Development of the Market in the Future 3 １．Housing Defect Warranty Insurance Market in Japan 4 ① WarrantyInsuranceonNewHousing Flow of Market Size of Insurance 1200 60.0% 1000 50.0% 800 40.0% 600 30.0% 50% of housing starts participate in the insurance Number of Policy Housing Starts Participation Rate 400 20.0% 200 10.0% 0 The market size is smaller than expected 0.0% 2008 2009 2010 2011 2012 2013(est) Major housing suppliers tend to choose “deposit” “Deposit” is chosen for small sized units of apartments 5 ① WarrantyInsuranceonNewHousing JPY 30B (＊) (USD 288M) (＊)The inspection fee and reinsurance premium are included 6 ① WarrantyInsuranceonNewHousing 9 The cumulative Loss Ratio is less than 10%. So far, so good, but ・・・. Loss Ratio Construction Rush ? 7 ② VoluntaryInsurance on Pre‐ownedHousing Three types of Defect warranty Insurance on Pre-owned Housing Renovation •The annual sales number is around 2,500 policies. •Registration System for Renovation Organization may enlarge this insurance market. Traded Housing •The annual sales number is around 4,000 policies. •There are two types of trade. (a) Between individuals (b) Suppliers and individuals Large-scale Renovation •The annual sales number is around 500 policies. •Deterioration of the apartment will enlarge the markets. 8 2. Our Suggestion for Sound Development of the Market in the Future 9 Our SuggestionforSoundDevelopmentoftheMarketintheFuture We are developing the following products to expand the market 10 years Warranty Extension Insurance Subsidence Insurance Completion Warranty Program 10 ① 10YearsWarrantyExtensionInsurance Estimate Reference : Nomura Research Institute, Ltd. The business opportunities regarding a new housing will decrease for several years due to 9 Consumption tax increasing from 5% to 8% 9 Long life quality housing system was introduced in 2009 11 ① 10YearsWarrantyExtensionInsurance 10 years warranty Extension Insurance Voluntary Ins. Voluntary Ins. inspection & maintenance Voluntary Ins. Ins. on new housing Ins. on new housing 10ys extension ins. Ins. on new housing the housing quality assurance act 10ys extension ins. Ins. on new housing 10ys extension ins. developing 10 years warranty extension scheme 2001 2009 2014？ 10 Years Warranty for a Defect Voluntary insurance Compulsory insurance or deposit 10 Years Warranty Extension Insurance 12 ① 10YearsWarrantyExtensionInsurance ② VoluntaryInsurance on Pre‐ownedHousing Key factor of developing this insurance scheme Inspection Maintenance Legal Responsibility Early launch 13 ② SubsidenceInsurance Present Housing Insurance Companies Foundation ? Housing Ground level Foundation Subsidence Subsidence Subsidence Investigation Companies Admitted Insurance Company No organized back up Future Warranty Insurance Foundation Subsidence Subsidence Insurance Housing Insurance Companies Reinsurance Admitted Insurance Company Subsidence Investigation Companies 14 ③ CompletionWarrantyProgram Ordering a House Construction Warranty Program Construction Completion of Construction Bankruptcy of Contractor ・Additional Construction Fee ・Deposit Money Difficulty in Underwriting Completion Warranty Program Systemic Risk / Huge Risk Compulsory Basis Credit Risk Provided with warranty insurance on housing Adverse Selection Reinsurance Program by Admitted Ins. Company and Government 15 Our SuggestionforSoundDevelopmentoftheMarketintheFuture A lot of challenges, but we would like to support to expand the market by providing・・・ 10 years Warranty Extension Insurance Subsidence Insurance Completion Warranty Program 16 Thank you! Hiroaki Kawabata Tokio Marine & Nichido Fire Insurance Co., Inc. E-mail : hiroaki.kawabata@tokiom.com 17
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