Japan has one of the largest and most mature insurance markets in the world. The country records some of the highest life and non-life premiums written globally. Furthermore, it ranks high in terms of insurance penetration, which describes the ratio of total insurance premiums to gross domestic product in a given year. Life insurance dominates the insurance market, with high life insurance ownership among households.
Japan’s insurance industry
The insurance market in general can be divided into life insurance and non-life insurance, with the latter also being referred to as general insurance or property and casualty insurance. Life insurance makes up the larger part of the insurance industry in the case of Japan, accounting for around 74.1 percent of total gross premiums written. Life insurance penetration, the ratio of gross insurance premiums in a country to its gross domestic product (GDP), reached six percent in 2022, compared to a non-life insurance penetration of around two percent.
There are 42 life insurers and 33 general insurance companies active in Japan. Nippon Life, Dai-ichi Life, Meiji Yasuda, and Japan Post Insurance are key players in the life insurance market. The property and casualty insurance market is dominated by three insurance groups comprising Tokio Marine Holdings, Sompo Holdings, and MS&AD Insurance Group Holdings.
Development in recent decades
While Japan is home to some of the world’s largest insurance companies, the industry has been facing various challenges since the 1990s. The economic slump following the burst of the Japanese asset price bubble of the late 1980s led to a decline of the insurance penetration rate, which until then had been the highest in the world. Life insurance premiums decreased during this time, while asset portfolios lost value. During these years, the government liberalized the financial sector, which led to an increasing presence of foreign insurers and a restructuring of pricing regimes. As a result, insurance agencies, which are not bound to one specific company and can therefore act like brokers, gained in importance as a sales channel. The deregulation in general resulted in fiercer competition and a phase of consolidation.
