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Japan’s top insurers face slow growth prospects

Open-access content Wednesday 9th September 2020 — updated 11.35am, Monday 14th September 2020
Authors
Huw Morris
Mount Fuji
@Istock

Japan’s top 10 insurers are vulnerable to rising claims and declining investments due to their strong dependence on the individual life insurance market, according to a leading data and analytics specialist.

GlobalData warns such over-reliance on one business will “definitely slow down” growth in the country’s insurance industry.

The leading five players - Nippon Life, Japan Post Insurance, Meiji Insurance, Sunitomo Life and Dai-ichi Life - particularly rely on life insurance, the company says.

But the sixth and seventh-placed insurers, Tokio Marine and Sompo Japan Nipponkoa, appear well-placed to increase their market share, as they largely rely on motor and property insurance, two markets which are not expected to see large increases in claims.

Although Japan has not been hit as hard as other countries by the Covid-19 pandemic, with insurers better placed to deal with the fallout, the country’s life insurers will still be impacted by volatility in global investments, analysts argue.

“The top 10 insurers generate 77% of business from life and pensions with seven of the top 10 insurers generate all of their business from these lines,” said GlobalData insurance analyst Deblina Mitra.“Dependence on life insurance makes most of the top insurers vulnerable to the expected stagnancy in premium growth, as well as low investment returns prevalent in the business.

“The top 10 life insurers account for 69% of the individual life insurance business. This means the life insurance business is dominated by its key players.

“The insurers are likely to be impacted by the slowdown underway in this business, both due to low returns and stagnant premium growth. Japan Post and Nippon Life appear the most exposed in this regard.”

 

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