Leading data and analytics company GlobalData has released its forecast for the general insurance market in Japan, estimating growth at a compound annual growth rate (CAGR) of 3% from JPY11.15 trillion (US$101.6 billion) in 2021 to JPY12.92 trillion (US$133.1 billion) in 2026 in terms of gross written premiums.
The growth will primarily be driven by an increased demand for commercial insurance lines such as property and liability insurance, which in turn will be driven by an increased frequency of natural catastrophic events, cyber attacks, and geopolitical risks, GlobalData said.
Motor insurance was Japan’s leading insurance line in the general insurance segment, accounting for a 50.5% share in terms of GWP in 2021. While it registered a decline in premium since the onset of the pandemic – a trend GlobalData expected to continue well into this year due to inflation and global automobile chip shortage – the segment is expected to recover from 2023.
Property insurance was the second largest segment in the country, with a 25.5% share in 2021. The year saw an earthquake in Fukishima which caused an insured loss of more than US$2.5 billion.
GlobalData predicted that the regular occurrence of natural catastrophic events in Japan would support the growth of property insurance at a CAGR of 4.9% from 2021 to 2026. Senior insurance analyst Shabbir Ansari added that the increased spending on infrastructure projects which began earlier this year, such as the Abukuma onshore wind farm and Logiport Nagoya, would also help grow the segment.
Liability insurance accounted for 8.1% of general insurance GWP in 2021, driven by a growth in demand for cyber liability and political risk insurance. With increased remote working situations and the ongoing Russia-Ukraine conflict, liability insurance was expected to grow at a CAGR of 4.7% during 2021 to 2026.
Personal accident and health, marine, aviation and transit, and financial lines insurance accounted for the remaining 16% GWP share.
“The Japanese general insurance industry is expected to maintain an upward growth trend during the next five years…,” Ansari said. “The profitability of insurers, however, will remain shadowed due to rising inflation.”