The Japanese property insurance industry is set to grow at a compound annual growth rate (CAGR) of 2.8% from JPY3.2 trillion ($22.4 billion) in 2024 to JPY3.6 trillion ($26.5 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.
As per GlobalData’s Insurance Database, Japan’s property insurance market declined by 0.9% in 2023, primarily due to insufficient underwriting of policies covering natural catastrophes (Nat-cat), as rising costs and the frequency of disaster-related claims pressurized insurers’ profitability. However, growth is expected to rebound in 2024, driven by high demand for Nat-cat insurance and increased activity in the construction and energy sectors.
Aarti Sharma, Insurance Analyst at GlobalData, comments: “The rise in the frequency of Nat-cat events in Japan is fueling the growth of property insurance, leading to heightened risk perception, which will prompt primary insurers to enhance their retentions in response to the rising reinsurance costs. Moreover, the higher cost of claims driven by inflation is expected to increase the premium rates that will support the growth of property insurance.”
Japan is highly susceptible to natural hazards such as earthquakes and typhoons due to its geographical location. This has led to an increase in demand for fire and natural hazards insurance policies that are expected to account for an 84.7% share of property insurance premiums in 2024.
In 2024, Japan has faced frequent Nat-cat events, starting with the Noto Peninsula earthquake on January 1, which led to insurance payouts worth JPY90.97 billion ($579 million) by May 2024, according to the General Insurance Association of Japan (GIAJ). Furthermore, a magnitude 7.1 earthquake struck Kyushu on 8 August 2024, triggering Japan’s first alert for a potential megaquake along the Nankai trough. Typhoon Shanshan hit Kyushu on 29 August 2024, further increasing insured losses.
Increased construction activities will support property insurance growth. According to GlobalData, the construction industry’s output is expected to record an annual average growth of 1.1% between 2025 and 2028, supported by investments in renewable energy, manufacturing, and commercial sectors.
The government’s push to generate 36-38% of electricity from renewable energy sources and increase nuclear energy’s share in the energy mix from 7% in 2022 to 20-22% by 2030 will support property insurance growth. As Japan adopts more renewable energy infrastructure, insurers may need to adjust their coverage models, especially for properties tied to or located near clean energy installations like solar farms or hydro dams.
Sharma continues: “Increasing technological advancements with the use of artificial intelligence (AI) and the Internet of Things (IoT) are also expected to support property insurance. Data integrations to enhance the decision-making process in pricing, underwriting, and risk management will aid in improving the response time and efficiency of property insurers.”
In agriculture, an aging population and labor scarcity are paving the way for robotics in yield determination, boosting vegetable production, and automation in harvesting through AI-equipped robots. Improved crop management through automation and real-time monitoring could reduce crop losses, lowering claims on crop insurance.
Sharma concludes: “The Japanese property insurance market is expected to experience steady growth in the coming years, driven by increased demand for coverage against Nat-cat events and expansion in the construction, energy, and agricultural sectors. The evolving landscape of the Japanese property insurance market will prompt insurers to adjust their coverage models and adapt to new risks with the help of technological advancements.”
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Notes to Editors
- Quotes provided by Aarti Sharma, Insurance Analyst at GlobalData
- Information is based on GlobalData’s Global Insurance Database
- This press release was written using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData’s team of industry experts
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