TOKYO — US insurance broker Marsh has teamed up with a Japanese partner to create a new type of agency that offers specialised recommendations on corporate insurance coverage, seeing an opportunity in an industry rocked by a price-fixing scandal.
Marsh Japan and MST Insurance Service this month launched MST Marsh, which they run as a 50-50 joint venture.
The new company recommends insurance to companies based on their specific risks, focusing on medium to large companies with annual revenues of about 30 billion yen to 200 billion yen ($200 million to $1.3 billion).
MST Marsh advises companies not only on traditional types of insurance, such as fire and liability, but also on insurance for emerging risks, such as cyber-attacks and supply chain disruptions.
“We optimise insurance that companies have let slip through the cracks or bought too much of,” said Katsutoshi Ikejima, vice president of the joint venture, who has long worked in corporate sales at Marsh. “There should be a big need for this.”
Japanese companies often buy insurance through agencies within their corporate groups. The lack of specialist knowledge among such agents has been cited as one of the factors that set the stage for the recent revelations of widespread price-fixing by major casualty insurers.
Having more agents who understand the risks faced by insurance buyers can help prevent the purchase of inappropriate cover and make it easier for companies to assess whether their premiums are too high. Independent agents also pose less risk of conflicts of interest than in-house agents.
Marsh has acted as an insurance broker, representing clients seeking coverage. Brokers, who are on the buyer’s side of the transaction, are seen as better positioned to act in a company’s best interests than agencies, which work for insurance sellers.
However, the broker model has not gained much traction in Japan, where it accounts for only about 1% of the total insurance market.
Marsh hopes to expand its client base by working with MST, one of Japan’s largest financial institution-affiliated insurance agencies. It has a long-standing relationship with MUFG Bank. Although MST Marsh is an insurance agency, it will draw on the expertise Marsh has developed as a broker in other parts of the world.
