21. The Sales Channel of Life Insurance and Relationship Marketing

In Japan, sales agents stimulate the demand for insurance by building a relationship of trust with customers. In recent years, the growth of new life insurance policies has become sluggish owing to the low birthrate and an aging population. Therefore, the need to build good relationships further increases to maintain the existing insurance contracts. Studies have examined the factors that lead consumers to buy life insurance through sales agents, but rarely have any explored how sales agents’ activities affect the contract amount. We explain relationship marketing in the Japanese life insurance market using the accumulation of human capital theory as well as estimate its effect on the insurance contract amount. The study therefore contributes to the literature in determining whether relationship marketing helps in increasing the contract amount. This study used panel data analysis and insurance data were obtained from the annual reports of individual insurance companies. The empirical results reveal that as the number of sales agents increases, a decrease is seen in the total amount of individual insurance in force in traditional and Japan Post insurers. This implies that sales agents fail to build good relationship marketing. The employee turnover rate is high because anonymity of labor does not dissipate. Japanese life insurers need to evaluate the proficiency of labor and improve skills to decrease employee turnover.