Japanese general insurance industry to grow 2.8% in 2023

An increase in car sales, new infrastructure projects, an increasing demand for policies covering natural catastrophic events, and rising cases of cyberattacks will see the Japanese general insurance industry grow by an estimated 2.8% in 2023, according to GlobalData.

The data and analytics company forecasts that the sector is set to grow at a compound annual growth rate (CAGR) of 3.4% from JPY11.9trn ($89.8bn) in 2023 to JPY13.6trn ($116.5bn) in 2027, in terms of gross written premiums (GWP).

Manogna Vangari, insurance analyst at GlobalData, said: “Japan’s economy expanded by 1.5% in Q2 2023, which is expected to translate into 6% annual growth in 2023, much stronger than the initially forecasted annual growth of 1.0%, as per the Economic and Social Research Institute of Japan. The growth is supported by key sectors of the economy such as automobiles, construction, real estate and tourism, as well as export activities, which will drive general insurance growth in the country.”

Motor insurance, the leading line in the Japanese general insurance industry, is estimated to account for a 48.0% share of GWP in 2023. It is forecast to grow at a CAGR of 1.9% over 2023-27, backed by increased automobile sales.

Property insurance, the second leading general insurance line, is estimated to account for 27.4% share of GWP in 2023. It is forecast to grow by 5.4% in 2023, supported by the increased demand for policies covering nat cat events.

Vangari added: “Property insurance will also benefit from the growth in the construction sector, supported by a recovery in housing demand, the construction of new dwellings, and increased sales of residential homes. The property insurance GWP is forecast to grow at a CAGR of 5.8% over 2023-27.”

Liability insurance is estimated to account for an 8.2% share of premiums in 2023. It is forecast to grow at a CAGR of 3.5% over 2023-27 according to GlobalData. It said increasing instances of cyberattacks have created a high-risk environment for companies globally, noting that according to the Metropolitan Police Department in Japan, the number of damages caused by ransomware attacks in 2022 increased by 57.5% as compared to 2021.

Financial lines, marine aviation and transit insurance, and miscellaneous insurance are expected to account for the remaining 33.9% share of GWP in 2023.

“The general insurance penetration in Japan at 1.8% in 2023, which is lower as compared to the advanced APAC economies like Australia (3.6%), and New Zealand (2.3%), provides ample growth opportunities for insurers. Increasing automobile sales, innovative product developments, and rising demand for NatCat policies present a positive growth outlook for the general insurance sector over the next five years,” said Vangari.