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products. This rider, where available, provides a lump sum payment for a range of critical illness events including
traumatic brain injury, Type 1 diabetes, advanced Alzheimer’s disease and many more. In January 2016, a new group
hospital indemnity plan was introduced that includes 11 new benefits, including telemedicine and health screening. This
plan provides flexibility, allowing our clients to personalize their plan designs to complement the underlying medical
coverage that is offered to employees.
Aflac U.S. offers additional coverages to those listed above, including dental, vision and life policies. Aflac U.S. offers
fixed-benefit dental coverage on both an individual and group basis. Aflac U.S. offers Vision Now
SM
, an individually issued
policy which provides benefits for serious eye health conditions and loss of sight as well as coverage for corrective eye
materials and exam benefits. Aflac U.S. also offers term- and whole-life policies on both an individual and group basis.
For additional information on Aflac's U.S. products and composition of sales, see the Aflac U.S. Segment subsection of
MD&A in this report.
Distribution Channels
Aflac Japan
Aflac U.S.
Individual/ Independent Corporate Agencies
Independent Associates
Affiliated Corporate Agencies
Brokers
Banks
Japan
The traditional channels through which we have sold our products consist of individual agents/agencies, independent
corporate agencies, and affiliated corporate agencies. The individual agencies and independent corporate agencies that
sell our products give us better access to workers at a vast number of small businesses in Japan. Agents' activities are
primarily focused on insurance sales, with customer service support provided by the Aflac Contact Center. Affiliated
corporate agencies are originally formed when companies establish subsidiary businesses to sell our insurance products
to their employees as part of a benefit package, and then expand to sell our products to other parties such as suppliers
and customers. These agencies help us reach employees at large worksites, and some of them are also successful in
approaching customers outside their business groups. We believe that new agencies will continue to be attracted to Aflac
Japan's competitive commissions, attractive products, superior customer service and strong brand image.
We have sold our products to employees of banks since our entry into Japan in 1974. However, December 2007
marked the first time it was permissible for banks to sell our type of insurance products to their customers. By the end of
2016, we had agreements with approximately 90% of the total number of banks in Japan, to sell our products. We believe
we have more banks selling our supplemental health insurance products than any of our competitors. Japanese
consumers rely on banks to provide traditional bank services, and also to provide insurance solutions and other services.
We believe our long-standing and strong relationships within the Japanese banking sector, along with our strategic
preparations, have proven to be an advantage, particularly starting when this channel opened up for our products. Our
partnerships throughout the banking sector provide us with a wider demographic of potential customers than we would
otherwise have been able to reach, and it also allows banks to expand their product and service offerings to consumers.
In 2005, legislation aimed at privatizing Japan's postal system (Japan Post) was enacted into law. The privatization
laws split Japan Post into four operating entities that began operating in October 2007. In 2007, one of these entities
selected Aflac Japan as its provider of cancer insurance to be sold through its post offices, and, in 2008, we began selling
cancer insurance through these post offices. Japan Post has historically been a popular place for consumers to purchase
insurance products. Legislation to reform the postal system passed Japan’s legislature, the Diet, in April 2012 and
resulted in the merger of two of the postal operating entities (the one that delivers the mail and the one that runs the post
offices) in October 2012. In July 2013, Aflac Japan entered into a new agreement with Japan Post Holdings to further
expand the partnership that was established in 2008. At the end of June 2014, Japan Post Insurance (Kampo) received
approval from Japan’s primary insurance regulator, the Financial Services Agency (FSA), to enter into an agency contract
with Aflac Japan to begin distributing Aflac Japan's cancer insurance products through all of Kampo's 79 directly managed
sales offices. Aflac Japan has developed a unique Aflac-branded cancer insurance product for Japan Post and Kampo
that was introduced in October 2014. In the fourth quarter of 2014, the number of postal outlets selling our cancer
insurance products expanded to approximately 10,000, and beginning in July 2015, Japan Post expanded the number of
post offices that offer Aflac's cancer insurance products to more than 20,000 postal outlets. We believe this alliance with
Japan Post, which is included in our affiliated corporate agencies distribution channel, has benefited and will further
benefit our cancer insurance sales.
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