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Making a Strong Distribution System Even Better
In addition to expanding our product line, we remain dedicated to improving a distribution system that we believe is already the best in the industry. The number of agencies representing AFLAC increased 10.1% by the end of 2001, compared with 2000, while the number of licensed sales associates rose 20.6% to more than 52,000. In 2001, 42% of our sales came from agencies that are affiliated with the largest companies in Japan. And while sales to workers at large employers will continue to play an important role at AFLAC, we are also expanding our reach by recruiting individual agencies. We believe growing this segment of our distribution system will allow us to better penetrate the vast market of small to medium-size businesses in Japan.
Another way we have expanded our distribution system is through our strategic marketing alliance with Dai-ichi Mutual Life. Dai-ichi Life is Japan's second largest life insurance company in terms of assets and has a sales force of more than 50,000 agents. In April 2001, Dai-ichi Life's sales force began selling our cancer life policy. Based on last year's sales, it's clear that the alliance has been a tremendous success. For the year, Dai-ichi Life sold more than 265,000 AFLAC cancer life policies, accounting for approximately 11% of new annualized premium sales for the year. |
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Efficiency Benefits Customers and Agencies
Operating efficiency is perhaps our greatest competitive strength in Japan. It enables us to offer the best products at the best prices to consumers, while also providing the best compensation to our sales force. Quite simply, we believe we are the low-cost producer in Japan. Based on Financial Services Agency (FSA) data for instance, an AFLAC employee services about six times the number of policies compared with an employee at Japan's largest life insurers. And our general operating expenses per policy are significantly lower than those of other life insurers in Japan.
One key to our efficient operation is our use of technology. We pioneered the use of a system called Cyclone, which is the Japanese version of our SmartApp system. Our individual agencies use Cyclone to transmit policy applications to our headquarters in Tokyo. We have also started using imaging technology whereby we convert paper policy applications to electronic files. Customer service employees can retrieve electronic files more quickly and efficiently than they can retrieve paper files. Also, storing applications as computer files rather than paper files reduces costs by saving storage space. |
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