Japanese life insurance industry expected to grow at CAGR of 2.6% but ‘tough road’ lies ahead

Written by Adam Cadle

26/09/2022

The Japanese life insurance industry is expected to grow at a compound annual growth rate (CAGR) of 2.6% from JPY29,427.8bn ($274.9bn) in 2021 to JPY33,545.4bn ($313.3bn) in 2026, in terms of direct written premiums, GlobalData has said.

The country’s life insurance industry registered 2.4% growth in 2021 after two consecutive years of decline in 2019 and 2020.

However, GlobalData said the road ahead looks difficult for life insurers because of the country’s aging demographic and economic factors.

Ashish Raj, insurance analyst at GlobalData, commented: “The industry growth is expected to remain sluggish in 2022 and 2023 as the term and savings products are not sought-after life insurance products among the older population.”

Furthermore, a persistent low-interest rate environment since 2010 due to a stagnant economy has prompted insurers to reduce the sales of savings products offering guarantee returns. Since the Bank of Japan is persisting with low-interest rates, a recovery in the sale of life products with guaranteed returns is expected to be minimal over the next few years.

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