Japan’s general insurance sector slated for$94b by 2028

The industry is seen to grow 1.7% in 2024.

The Japanese general insurance market is projected to grow at a compound annual growth rate (CAGR) of 2.2%, increasing from $81.1b in 2024 to $93.9b (gross written premiums) by 2028, according to GlobalData.  

GlobalData’s Insurance Database indicates a 1.7% growth in 2024, driven by higher demand for natural catastrophes and workers' compensation policies. 

“Japan’s economy went into a recession in early 2024 after witnessing a contraction in the last two quarters of 2023,” Sneha Verma, Insurance Analyst at GlobalData said.

“As a result, the general insurance industry witnessed a decline of 0.5% in 2023 as compared to 3.4% growth in 2022. The growth is expected to rebound in 2024, supported by an increase in premium rates across many general insurance lines driven by high inflation and rising claims due to extreme weather events,” 

The sector's recovery in 2024 is attributed to rising premium rates across several insurance lines, fueled by high inflation and increasing claims due to extreme weather.  

Motor insurance, accounting for 47.5% of general insurance gross written premiums (GWP) in 2024, remains the largest segment. 

However, despite higher vehicle sales, motor insurance premiums fell by 0.1% in 2023 due to lower traffic accident rates. 

Similar trends are anticipated in 2024. Insurers may raise motor insurance premiums in 2025 to address increased claims from frequent and severe weather events. 

In April 2023, hailstorms in Hyogo Prefecture caused $0.21b in insured vehicle losses, with 79,468 claims reported. Motor insurance is forecast to grow at a CAGR of 1.5% from 2024 to 2028.  

Property insurance, comprising 27.6% of GWP in 2024, is expected to grow by 5.4% in the same year, spurred by higher premiums linked to frequent natural disasters. 

In June 2023, the General Insurance Rating Organization of Japan (GIROJ) raised the reference net rate for personal fire insurance premiums by 13%, the largest hike in six years. Property insurance is projected to grow at a 2.8% CAGR from 2024 to 2028.  

Liability insurance, representing 8.9% of GWP in 2024, is forecast to grow by 4.2% in 2024, supported by rising demand for cyber insurance and workers' compensation. 

Workers’ compensation claims increased by 21% in 2023, according to the Ministry of Health, Labor, and Welfare. The liability insurance segment is expected to expand at a 3.9% CAGR from 2024 to 2028.  

Personal accident and health, marine, aviation, transit, and financial lines insurance will account for the remaining 15.9% of GWP in 2024.  

“Slower growth in motor insurance, which accounts for almost half of the general insurance premiums, presents a moderate growth outlook for Japan’s general insurance industry over the next five years. Persistently high claim payouts led by frequent Nat-cat events and high inflation will prompt insurers to reassess their risk exposure and increase premium rates in the short term,” Verma said.