A decline in motor premiums is pushing the Japanese general insurance market to focus on property and specialty lines.
This trend has been pointed out by analyst firm GlobalData, who pointed to statistics from Japan that suggest a fall of 12.7% in the number of traffic accidents within the country between 2016 and 2020. This, says GlobalData, has prompted insurers to reduce premiums on compulsory third-party policies twice, leading to a decline in CAGR for motor insurance of 0.3% over this period.
At the same time, the share of motor insurance business for Japan’s top four insurers—which made up nearly 90% of net written premiums in 2020—declined from 63.3% to 60.5% over the four-year period outlined above.
Swarup Kumar Sahoo, senior insurance analyst at GlobalData, said in a statement: “The Japanese general insurance market has been dominated by four leading insurers, which accounted for 87% of the net written premiums (NWP) in 2020. The combined premiums of the top four insurers contracted by 0.2% in 2020 due to a decline in motor insurance premium, driven by a reducing vehicle sales and reduction in premium rates over the previous years.”
Meanwhile, said GlobalData, the property insurance segment grew at a CAGR of 5.2% between 2016 and 2020. This growth was apparently driven by an increase in reinsurance premium rates and natural catastrophic events that led to increased risk.
GlobalData added: “Consequently, property insurance share within total premium for the top four insurers increased from 12.9% in 2016 to 15.2% in 2020.”
Japan is a hotbed of insurance activity when it comes to natural disasters. In November, it was announced that Aon would partner with ICEYE to manage climate risks in Japan. Speaking at the time, the Japan Meteorological Agency said that the company experienced three typhoon landfalls and multiple flood events annually. The country also has a little-heralded monsoon season over the summer months.
Meanwhile, Swiss Re reported last March that the earthquake protection gap within the country stood at $25bn, which it said was highest in the world in terms of premiums.
