Japan's insurance market on the brink of growth spurt – report

Japan’s insurance market on the brink of growth spurt – report | Insurance Business Asia

Insurance News

Japan’s insurance market on the brink of growth spurt – report

Report unveils forces behind insurance market boom

Insurance News

By
Roxanne Libatique

The insurance industry in Japan is on track for substantial growth, with projections indicating an increase of US$54.7 billion in market size from 2022 to 2027, according to market research and advisory firm Technavio’s latest analysis.

The growth trajectory, characterised by a 3.12% compound annual growth rate (CAGR), highlights the sector’s robust dynamics and the competitive presence of key industry players.

Among the noteworthy entities are Allianz SE, Asahi Mutual Life Insurance Co, and Dai Ichi Life Holdings Inc, reflecting the market’s concentrated nature due to the influence of both international and regional insurance providers.

Factors driving insurance market expansion in Japan

Driving this expansion is the heightened focus on short-term insurance solutions. These products are essential for covering specific, time-bound needs such as travel, events, and temporary projects, catering to Japan’s particular vulnerability to a range of risks including natural disasters, health crises, and business interruptions.

Another significant trend bolstering the market is the rising requirement for vehicle insurance, mandated for all car owners, amidst increasing road traffic issues and accident frequencies.

Conversely, the industry faces hurdles, notably the threat posed by cybercrime, which undermines the integrity and efficacy of short-term insurance offerings intended for a spectrum of protective needs.

Life and non-life insurance growth in Japan

The segmentation of Japan’s insurance market delineates between life and non-life insurance, with the former engaging a vast majority of the populace, thanks in part to attractive life insurance policy interest rates.

In the realm of non-life insurance, direct sales channels are instrumental in distributing essential policies that encompass property and casualty insurance, crucial for safeguarding against natural calamities as evidenced by recent earthquakes.

Innovation and market consolidation are key themes within the non-life insurance space as providers vie for dominance, especially in the auto insurance sector, propelled by the legal requirement for liability coverage.

According to Technavio, the life insurance segment witnesses an upsurge in individual policy uptake, providing a spectrum of offerings from whole-life to term-life and specific disease coverages, with banking institutions and agencies playing a pivotal role in policy distribution. This has contributed significantly to the industry’s resilience and growth potential.

Looking ahead, the intersection of technological innovation and shifting consumer preferences is poised to redefine the insurance landscape. Insurers are expected to leverage advanced analytics and digital interfaces to elevate customer interaction and streamline processes. Meanwhile, regulatory oversight will continue to ensure fairness and consumer protection, influencing premium and policyholder classifications.