Japan's insurance market tightens amidst increased disasters

Japan’s 3 major groups account for 86% of net premium income.

Japan's non-life insurance market consists of 55 general insurance companies, with 33 licensed as domestic insurers and 22 as foreign insurers, as of 1 November 2023, Toa Re’s Japan’s Insurance Market 2024 report stated.  

Since the insurance industry liberalised in 1996, mergers and business integrations have led to an oligopoly dominated by three major groups: MS&AD Insurance Group Holdings, Sompo Holdings, and Tokio Marine Holdings.  

Together, these groups account for over 86% of net premium income, totalling $63.92b (¥9.132t) for the 29 members of the General Insurance Association of Japan (GIAJ) in fiscal 2023.  

The market also includes cooperative insurance companies, known as Kyosai, which generated $14.70b (¥2.1t) in premium income in fiscal 2022.  

Additionally, the Small Amount and Short Term Insurance (SASTI) sector continues to expand, offering insurance products such as renters and pet insurance. SASTI companies, introduced in 2006, face lower regulatory hurdles, with a minimum capital requirement of $0.07m (¥10 million), compared to $7m (¥1b) for traditional insurers.  

In fiscal 2023, net premium income across all lines increased by $0.08b (¥12b), reaching $63.92b (¥9.132t), mainly driven by the automobile sector.  

Net claims paid decreased by $0.37b (¥53b) to $37.31b (¥5.33t), whilst the loss ratio improved by 0.6 percentage points to 64.3%. Underwriting profit rose by $0.44b (¥63b) to $1.24b (¥177b), and ordinary profit increased by $1.97b (¥281b) to $7.33b (¥1.047t), resulting in a net income of $6.27b (¥896b) after taxes.  

Fire insurance premiums have risen  since 2018 due to natural disasters, and insurers have responded by tightening terms and increasing deductibles. Reinsurance renewals for 2024 saw stable terms and conditions, with some lines experiencing slightly lower premium rates.  

Japan’s Financial Services Agency (JFSA) has emphasised the need for advanced risk management amid increasing natural disasters and plans to introduce economic value-based solvency regulations in fiscal 2025.

($1.00 = ¥143.19)