SIRC 2026: Japan’s high-tech investment boom reshaping risk landscape

November 2 2026 by

Japan is investing again, and the nature of that investment is creating new and interconnected risks that insurers and reinsurers must grapple with, according to Atsuhiro Dodo, head of Japan at Swiss Re. 

Private non-residential investment in Japan has climbed to roughly 19% of GDP this year, reaching its highest level since 1991.  

“What is notably different today is the composition and concentration of investment,” Dodo said.  

Unlike previous cycles, today’s spending is concentrated on semiconductors, AI, data centres, advanced manufacturing and the power infrastructure supporting them.  

“These investments tend to be more capital intensive, technologically complex and dependent on specialised infrastructure. 

“For insurers, these developments create significant concentrations of value. More importantly these facilities are often interconnected and depend on shared infrastructure, including power, water, telecommunications, transport and supply-chains.  

“This increases the potential for business interruption and correlated losses materially even when physical damage is limited.” 

That interconnection is particularly acute given Japan’s earthquake exposure.  

“A physical loss at one facility is only part of the potential impact,” Dodo added.  

A major earthquake could interrupt critical utilities, affecting multiple facilities simultaneously and triggering business interruption and supply chain disruptions, meaning risk assessment needs to extend beyond the individual facility. 

And while capacity is available, Dodo said, “it must be deployed with a clear understanding of these concentrations and interconnections, backed by high resolution exposure data, catastrophe modelling and risk engineering”.  

“Pricing also needs to reflect the full risk rather than only the value of the physical assets,” he added.  

Beyond the investment cycle, Dodo identified the continued digitalisation and introduction of AI as having created new cyber, operational and liability exposures as an emerging risk for Japan.

“As AI becomes more widely embedded in business operations, companies also need to consider potential liability exposures alongside cyber and operational risks.”  

These developments are broadening the reinsurer’s role.  

“Providing capacity remains important, but our role increasingly extends to helping clients better understand, anticipate and manage interconnected risks,” he said.  

Evolving exposures

On changing exposures, Dodo warned of underinsurance if declared values are not regularly updated. 

He pointed to construction costs rising around 6% annually last year, following substantial cumulative increases.  

“Broadly speaking, we have observed insurers looking closely at how their programs respond to the risks they have today, including greater concentrations of value and non-peak perils,” Dodo added.  

“This puts more emphasis on high-quality exposure data, clarity of coverage and structures that provide meaningful protection rather than simply maximising available capacity.” 

“We should be cautious not to interpret a period with fewer peak events as a reduction in underlying risk.”

Atsuhiro Dodo, Swiss Re

Dodo cautioned against being taken in by the benign nat cat environment. 

“We should be cautious not to interpret a period with fewer peak events as a reduction in underlying risk,” he said.  

For insurers and reinsurers, “it still comes back to more granular data. We need reliable location-level exposure data, continually updated hazard models and a strong understanding of how land use, asset values and business interruption exposures are changing”, Dodo added.  

And pricing, he said, “needs to be forward-looking. While recent loss experience is relevant, it cannot be the only guide”. 

Renewals dynamics

The country’s primary market “has continued to demonstrate relatively firm rating and underwriting discipline, even when other major global P&C insurance market have softened”.  

“These developments are encouraging greater scrutiny of underwriting profitability and a stronger focus on risk-based pricing, reinforcing underwriting discipline across industry,” he added.  

“I expect renewals to be highly portfolio specific. Loss experience, changes in insured values, the quality of exposure information and program structure will all play an important role in determining the outcomes.”  

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