Non-life insurance, also known as general insurance or property and casualty (P&C) insurance refers to any form of insurance that covers personal property and liability. Typical examples of P&C insurance are home and automobile insurance. Although much smaller than the Japanese life insurance market, Japan’s P&C insurance market, which is dominated by three insurance groups, is one of the largest in the world, ranking 8th in terms of premium income.
Market size and key players
Based on gross premiums written, the non-life insurance market makes up roughly one-quarter of Japan’s insurance industry. In the fiscal year 2022, non-life insurance penetration, the ratio of direct gross premiums to GDP stood at 1.8 percent.
Net premiums written by property and casualty insurers amounted to over nine trillion Japanese yen. Voluntary automobile insurance was the leading business line, followed by fire insurance and miscellaneous casualty insurance. Voluntary and compulsory automobile insurance together accounted for almost 60 percent of premiums written.
There were 55 non-life insurers operating in Japan as of 2022. The property and casualty insurance market is dominated by three groups: Tokio Marine Holdings, Sompo Holdings, and MS&AD Insurance Group Holdings and their subsidiaries, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance, and Aioi Nissay Dowa Insurance. In addition to these insurers, there are cooperatives and small amount and short-term insurance companies (SASTI) that offer insurance products.
P&C insurance and natural disasters
Japan is regularly hit by natural disasters, such as earthquakes, typhoons, and floods. Natural hazards have intensified and occurred more regularly in recent years, which has affected the profitability of the fire insurance business and forced Japanese insurers to raise their premium rates several times.
Fire insurance is property insurance that protects buildings, dwellings, and household goods against damage caused by fire, various weather phenomena, and theft. To protect their homes against damage caused by earthquakes, consumers must purchase earthquake insurance as an add-on to fire insurance. An estimated third of households in Japan were covered by earthquake insurance in 2022, for which a special system was established in 1996.
The earthquake insurance system is jointly operated by private insurance companies, the government, and Japan Earthquake Reinsurance. To ensure the payment of claims in the event of severe earthquakes, the government acts as a reinsurer. The liability limit is set by the Diet and amounted to 11.78 trillion yen for the government and 220 billion yen for private insurers in 2021.
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