The Evolution of Life Insurance: What Paradigm Shift Toward “Re-Radicalization” Is Needed for the Future? – Part 2

Modern life insurance traces its roots back to the medieval European guilds, born from a deeply human desire: not to stand by when someone close is in trouble, but to help. At its core, life insurance began as mutual aid among small, visible communities. In Japan today, where nearly 90% of households hold some form of life insurance, it serves as a vital part of the social infrastructure, complementing public welfare systems. However, recent declines in household participation rates and premium amounts indicate that life insurance’s presence in society is steadily waning.

To reverse this trend and drive a fundamental shift, a paradigm change is urgently needed—one that rethinks the very pillars of life insurance: its products and distribution channels.

At the heart of this shift lies the idea of "re-radicalizing" life insurance: reestablishing ecosystems of mutual aid within visible communities and delivering protection that seamlessly integrates into daily life. This means designing highly tailored coverage by use-case, and delivering the right coverage to the right person at the right time.

In the first part of this article, we explored the origin, present, and future of life insurance. If you haven't yet read it, we encourage you to start there to gain the full context.

This second part takes a step further, addressing the real-world challenges of realizing that envisioned future, while exploring how technology can overcome those barriers. We also examine the feasibility of monetization, sharpening the clarity of potential new business models. Our goal is to demonstrate that the future we propose is not just an idealistic concept, but an achievable evolution.

The vision we present calls for a paradigm shift that transforms the foundational elements of the life insurance business—its products and distribution. Because of this, it's only natural that this shift would face significant, unprecedented challenges. These challenges fall into two main categories: those from the insurer’s perspective, and those from the consumer’s perspective.

① Insurer-Side Barriers
• Developing a Massive Volume of Use-Case-Specific Coverage
From the insurer’s perspective, one major challenge is the need to develop a wide range of highly specific insurance products—such as “after-school activity continuation insurance” or “commute-to-school coverage.” Currently, developing a single insurance product can take up to a year. The idea of launching a large number of these simultaneously seems unrealistic within conventional frameworks.

• Seamless Attachment and Detachment of Coverage
Delivering appropriate coverage in real-time based on a consumer’s life stage requires the ability to attach and detach coverage seamlessly and rapidly. For each consumer, coverage might change frequently, and managing this dynamically would likely overwhelm today’s legacy system infrastructure.

• Identity Verification and Group Affiliation
To participate in insurance products designed for “visible communities,” consumers must go through rigorous Know Your Customer (KYC) processes and verify their group affiliations. When such processes occur repeatedly for a single customer, the burden on systems becomes enormous—seemingly infeasible under current technology setups.

② Consumer-Side Barriers
• Lowering the Barriers to Enrollment
Now let’s consider barriers from the consumer side. As is the case with many products and services, a key issue lies in lowering the psychological and practical barriers to purchasing life insurance. This has long been a challenge and remains a critical point of reform for the future.