Japan’s insurance industry is on track to exceed $470 billion by 2029, driven by premium hikes in both life and general insurance, according to a report from data and analytics firm GlobalData.
The sector is expected to grow at a compound annual growth rate (CAGR) of 3.9% from 2025 to 2029. Despite a projected economic contraction in 2024, steady demand and market adjustments are likely to support future growth.
Life Insurance Leads the Market
In 2024, life insurance made up 77.4% of Japan’s total insurance premiums. General insurance covered the remaining 22.6%.
Japan’s life insurance market is forecast to grow by 5.9% in 2025. The increase is fueled by the country’s aging population and longer life expectancy. GlobalData’s analyst Swarup Kumar Sahoo noted that older citizens are seeking more financial protection, boosting demand for life policies.
The National Institute of Population and Social Security Research reported that people aged 65 and older represented 29.3% of the population in 2024. This number is expected to grow to 34.8% by 2040.
Regulatory changes are also shaping the market. In January 2024, Japan’s Financial Services Agency tightened rules on selling foreign currency insurance products. This led insurers to shift focus back to policies based on the Japanese yen, which are more stable for domestic buyers.
Over the five-year period from 2024 to 2029, life insurance premiums are projected to grow at a CAGR of 4.4%.
General Insurance Grows Slowly but Steadily
General insurance is also expanding, though at a more modest pace. It is expected to grow at a CAGR of 2.2% through 2029.
Several factors are supporting this growth. These include rising premiums, increased demand for protection against natural disasters, and greater interest in liability insurance.
However, one key part of the general insurance market—motor insurance—is growing slowly. Motor policies make up nearly half of general insurance premiums, so this could limit overall growth in the segment.
Natural Disasters Drive Up Claims and Premiums
Japan has seen more frequent and severe weather events in recent years. These include typhoons, floods, and earthquakes. The increase in disaster-related damage has led to a rise in insurance claims.
As a result, insurers are adjusting how they assess risk. Many have raised premium rates to cover higher payouts and repair costs.
Since 2020, the General Insurance Rating Organisation of Japan has repeatedly raised the average reference rate for personal fire insurance. This nationwide rate helps insurers decide how much to charge customers. Each increase reflects the growing cost of insurance claims and home repairs.
Liability and Cyber Insurance on the Rise
Among the various general insurance categories, liability insurance is expected to grow the fastest in 2025. This growth is largely driven by two key factors: a rising number of cyber threats and stronger demand for workmen’s compensation policies.
As businesses invest more in digital operations, cyber risk coverage has become essential. At the same time, companies are under pressure to offer better employee protection, pushing up demand for worker compensation plans.
Economic Outlook: Short-Term Dip, Long-Term Recovery
Japan’s economy is predicted to shrink by 0.9% in 2024, following a 1.9% growth in 2023. Despite this short-term decline, analysts remain optimistic about a rebound.
According to GlobalData, a gradual economic recovery and a stable yen will encourage further growth in the insurance market from 2025 onwards. Premium increases in both life and general insurance are expected to support this momentum.
Looking Ahead
Japan’s insurance industry is evolving rapidly. Demographic changes, stricter regulations, and rising environmental and digital risks are reshaping the market.
As life expectancy climbs and natural disasters become more costly, more people are turning to insurance for financial protection. Companies, too, are reassessing their risk strategies, investing more in liability and cyber insurance.
If current trends continue, Japan’s insurance sector is well-positioned to reach and potentially surpass the $470 billion mark by 2029.
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