The decision by the Bank of Japan last week to effectively return to a zero interest rate policy is likely to cause even more life insurers to tip over the edge. Low interest rates have already seen five life insurers collapse in the past year, and the decision to stick with low interest rates will harm the survivors’ investment returns.

The insurers’ problem stems from the sale of savings-linked products in the late 1980s, when guarantees of more than 6% returns were put in place. Reuters said the combined value of negative spreads at the five biggest insurers alone – among more than 40 companies in the industry – is estimated at more than $18 billion for this financial year.