Market size and key playersJapan’s non-life insurance market is smaller than the life insurance market in terms of gross premiums written. Net premiums written by property and casualty insurers amounted to over eight trillion Japanese yen in fiscal year 2021. 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 net premiums written.
There were 55 non-life insurers operating in Japan as of 2022, among them 22 foreign companies that were licensed as branches. Japan’s 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 companies, cooperatives and small amount and short-term insurers offer different types of non-life insurance products.
Earthquake insuranceDue to the geographical location of the archipelago, Japan is prone to earthquakes. Moreover, non-life insurers are increasingly confronted with risks of extreme weather, such as floods and typhoons, that have affected the profitability of the fire insurance segment in recent years. Fire insurance protects homes and household goods against damage caused by fire and various weather phenomena. To protect their homes against earthquakes, consumers must purchase earthquake insurance as an add-on to fire insurance, 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. Around one-third of households was covered by earthquake insurance in 2021.