Japan’s P&C market to hit US$133bn by 2025: GlobalData
August 23 2021 by InsuranceAsia News
Japan’s P&C market is projected to grow from JPY11.1 trillion (US$104.1 billion) in 2020 to JPY12.6 trillion (US$133.1 billion) in 2025 in terms of gross written premium (GWP), according to a report by analytics firm GlobalData.
This means the compound annual growth rate (CAGR) for the general insurance industry is predicted to be 2.6% over the next five years ––a figure that has been revised due to the impact of the Covid-19 pandemic on the Japanese economy.
The Japanese economy declined by 4.6% in the fiscal year ending March 2021 due to the recurrence of new Covid-19 variants and slow vaccine rollout, said GlobalData insurance analyst Shabbir Ansari. Restrictions imposed on manufacturing and construction activities translated into slower growth for general insurance lines of business in 2020, he said.
The Japanese economy is expected to face challenges in the short-term due to the impact of COVID-19 pandemic, Ansair said. Product innovation in the automobile sector and the country’s vulnerability to nat-cat events will drive the growth for general insurance industry during the forecast period, he noted.
Motor insurance — a business line accounting for over 50% of Japan’s P&C premiums — declined by 3.6% decline in 2020 but is expected to grow by 1.4% in 2021, backed by improved vehicle sales. According to the Japan Auto Manufacture Association (JAMA), new vehicle registrations during January-April 2021 increased by 4.2% as compared to same period in 2020.
The motor insurance segment is expected to grow at a CAGR of 1.7% during 2020-2025, with the launch of fully autonomous vehicles targeting local and global markets and expansion of the electric car market driving growth, the GlobalData report said.
Property insurance, which accounted for 25.1% of general insurance premium in 2020, is expected to grow at a CAGR of 5.1% during 2020-2025, GlobalData projected. Frequent natural catastrophic events and an increasing demand for real estate will support the growth of property insurance in the country, the report noted. According to the General Insurance Association of Japan, 221,994 insurance claims were filed for damages caused by the Fukushima earthquake as of May 12, 2021.
Liability insurance, which accounted for 7.8% of Japan’s P&C premiums in 2020, is expected to grow at a CAGR of 2.8% during 2020-2025 driven by the third-party liability sub-segment.
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