Rising interest rates in Japan may dampen general insurance uptake and widen the protection gap, especially as insurers face losses from natural catastrophes. To cope, Japanese insurers are focusing on technology and data analytics for risk management and new product development, as Andy Tran from Swiss Re Asia Pte. Ltd. Japan Branch told Insurance Asia. He emphasized the importance of granular data for pricing and innovation and the investment in tools like hazard mapping.
Recent disasters like the Kyushu earthquake and Typhoon Shanshan in August highlighted Japan’s weak disaster preparedness. The government’s mega – earthquake warning underlines the need for better risk modelling. Some insurers have reduced their natural catastrophe capacity, especially for flood risks. However, Japan’s reliance on traditional systems, especially in rural areas, hampers real – time data collection and integration, making it hard to implement digital solutions. Japanese companies also lag behind Western counterparts in using data – driven solutions for risks.
Japan’s ageing population and outdated infrastructure complicate the risk profile. Premium increases are limited by affordability issues. Urbanization and ageing infrastructure pose compounded risks, and the building code issue affects insurance premiums. Japanese businesses are increasingly aware of interconnected risks such as supply chain, market, and cyber risks. The global cyber insurance market is growing, and a structured approach to cyber underwriting is needed. The government’s 2025 Economic Solvency Ratio enforcement will drive stricter risk management among insurers, and they have adapted through more disciplined underwriting, though loss ratios remain high in property insurance.
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