Latest market report from GlobalData; Japan is arguably one of the biggest Life insurance markets in the world when it comes to fundamental change over the next few decades, as an ageing population is inevitably replaced at some point, due to the policies enacted by Globalist politicians. Sadly, nothing in this forecast deals with that demographic scenario.
The Japanese life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 2.0% from JPY37.1 trillion ($289 billion) in 2024 to JPY40.2 trillion ($359.5 billion) in 2028, in terms of gross written premiums (GWP), according to GlobalData, a leading data and analytics company.
GlobalData’s Insurance Database reveals that the Japanese life insurance industry is expected to grow by 4.6% in 2023, supported by the revival of agency distribution channels and persistent demand for single premium foreign currency-denominated insurance products. Regulatory intervention in improving agency standards and increasing competition for greater market share in short-term insurance will also support growth over 2024–28.
Deblina Mitra, Senior Insurance Analyst at GlobalData, comments: “In Japan, agencies are a prominent distribution channel for life insurance products. The channel witnessed a dip in revenue in 2020 and 2021 due to the COVID-19 outbreak that limited face-to-face interaction, leading to slower industry growth.
“The industry GWP recovered with double-digit growth in 2022, primarily after the regulator reclassified COVID-19 under the less severe Category Five infectious disease, leading to a revival in agency sales. The trend is expected to continue in 2023 and beyond, supporting industry growth.”
The introduction of a new review system in early 2023 for agencies by the Life Insurance Association (LIAJ) will boost customer confidence and improve transparency, thereby positively influencing the channel’s growth over 2024–28. LIAJ has set 200 standards related to governance, personal data safety, customer support, and post-sales service under the new system. Agencies that qualify for these standards are assigned a higher credibility rating by the LIAJ. As of March 2023, 42 agencies were qualified by LIAJ.
Single-premium foreign-currency-denominated insurance products are also expected to support the industry’s growth in 2023, as ultra-low domestic interest rates since the late 1990s led to Japanese insurers offering policies in the US dollar and other foreign currencies due to the higher interest rates offered in those markets.
Soaring inflation resulting from the Russia-Ukraine war in 2022 further egged the US and other economies to raise interest rates, which, in turn, provided an impetus for domestic demand for foreign currency-denominated insurance in 2022 and 2023.
Mitra adds: “However, the Bank of Japan’s (BoJ) anticipated tightening monetary decision in 2024, where it is projected to end negative interest rates, may cause volatility in global capital markets. Any repercussions from this decision on foreign government bond yields or interest rates can influence foreign-currency insurance demand over 2024.”
Life insurance growth over 2024–28 is also expected to benefit from increased competition focusing on short-term protection-type policies. Increasing demand for these policies, traditionally sold by short-term insurers, led to incumbent life insurers entering this market during 2019–23.
The licensing process to sell these products is simpler compared to long-term policies, and their demand is growing due to simple product structure, ease of purchase (both online and offline), and resonance with younger demographics. Examples of short-term products include fertility treatment insurance for women and newborn hospitalization insurance.
Mitra concludes: “Japan’s life insurance outlook over 2024-28 remains buoyant as insurers expand through agencies and launch innovative short-term insurance products. Insurers are expected to be cautious of the BoJ’s interest-rate decisions and their potential impact on global capital markets over 2024.”
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