Japanese general insurers shift focus to property and specialty lines
Motor insurance premium decline triggered this shift.
Japanese general insurers are starting to shift their focus to property and specialty lines insurance due to declining premiums on motor insurance, according to the data and analytics firm, GlobalData.
Recent Japan’s statistics showed traffic accidents have decreased at a compound annual growth rate (CAGR) of 12.7% during 2016 to 2020 which prompted insurers to reduce premiums on compulsory motor third-party insurance twice during the last five years. The declining premiums has impacted growth of motor insurers which were already facing pressure from slow business environment and declining vehicle sales. As a result, motor insurance declined at a CAGR of 0.3% during 2016 to 2020. The share of motor insurance business for the top four insurers declined from 63.3% in 2016 to 60.5% in 2020.
Meanwhile, property insurance premium rates registered double-digit growth in 2020 which has become the focus of insurers. Property insurance segment grew at a CAGR of 5.2% during 2016 to 2020, driven by increase in reinsurance premium rates and increased risks associated with natural catastrophic (Nat-cat) events. Consequently, property insurance share within total premium for the top four insurers increased from 12.9% in 2016 to 15.2% in 2020.
Apart from property insurance, insurers are also focusing on specialty insurance lines such as cybersecurity, event cancellation, and business interruption.
“With the country’s vulnerability to natural catastrophic events and increasing cybercrime cases, insurers are expected to be more aggressive with product innovation in these segments, which will support their demand over the next few years,” GlobalData Senior Analyst Swarup Kumar Saho said.