According to data published by the General Insurance Association of Japan, direct premiums written for non-life insurance in Japan for the fiscal year 2023 were approximately JPY9.9tn ($64.12bn).
This is a moderate growth of approximately +2.5% over the five years from approximately JPY9.6tn in fiscal 2019.
Looking at the growth rate for the past five years by type of insurance, Marsh Japan senior vice president and head of carrier relationship management Masayuki Adachi said he sees that it varies greatly by type of insurance: fire insurance +9.6%, automobile insurance +3.9%, personal accident insurance -9.5%, and miscellaneous casualty insurance +15.2%.
On the other hand, the high growth rate of miscellaneous casualty insurance is partly due to the spread of cyber insurance, which covers risks such as cyber-attacks, and there is also an aspect of the market growing in response to new risks arising from changes in society,” Mr Adachi said.
In terms of reinsurance, he said reinsurance premiums paid by Japanese insurance companies have risen and Japanese insurance companies are struggling, but the increase in natural disasters is not limited to Japan.
“As such, I do not think reinsurance companies are particularly wary of natural disaster risk in Japan. Reinsurers can diversify risk by underwriting a balanced amount of risk around the world. In addition, the reinsurance market is currently in a soft and competitive trend, so there seems to be relatively abundant capacity,” he said.
The ageing of the population is becoming a social issue in Japan.
He said, at present, there is no significant impact on short-term, direct earnings, but there is an impact on income from motor insurance, which accounts for almost half of Japanese insurers' earnings, due to the increase in accidents caused by elderly drivers and the decline in the number of drivers.
Mr Adachi said for many years, Japanese insurance companies have operated in a business environment that is far removed from customer-first practices, particularly in the corporate insurance market.
“In response to the Business Improvement Order issued by the Financial Services Agency and future legislative revisions, it is necessary to completely break away from past practices and culture and quickly establish a system that can demonstrate its strengths in its core business,” he said.
Insurance companies have stated that, in response to the Financial Services Agency's request, they will complete the sale of their cross-shareholdings within approximately five years.
He said this is a risk for insurance companies at a time when the relationship between business and insurance companies is changing, but it is also an opportunity.
For more information, the full article will be published in the March 2025 issue of our Asia Insurance Review magazine, available on March 1st.