The Japanese life insurance market is set to achieve a 4.7% compound annual growth rate (CAGR), according to GlobalData. Direct written premiums (DWP) are expected to rise from $275.8 billion in 2024 to $371.2 billion by 2029. This growth is attributed to Japan’s economic recovery and the increase in domestic interest rates, which have boosted the demand for yen – denominated life insurance products. In 2024, the industry is forecast to expand by 6.8%, driven by growing consumer interest in single – premium yen – denominated products.
Swetansha Chauhan, an Insurance Analyst at GlobalData, noted in a report that the Japanese life insurance industry grew by 9.0% in 2023. This growth was propelled by increased consumer interest in yen – denominated single – premium insurance products after the Bank of Japan raised interest rates in March 2024, the first increase in 17 years. Despite a 2.9% economic contraction in the first quarter of 2024 compared to the previous year, a recovery is expected in the latter half of 2024, which will support life insurance growth. Previously, foreign currency – denominated policies in US dollars and euros had stable sales due to a weak yen and higher overseas interest rates. However, the Financial Services Agency (FSA) reported high cancellation rates, with 60% of these policies terminated within four years as policyholders took early profits. In response, some banks have reduced their offerings of foreign currency – denominated products and are focusing on yen – based ones.
Japan’s ageing population is a significant factor driving the life insurance market. In 2023, those aged 65 and above accounted for 29.1% of the population, and this is expected to reach 34.8% by 2040. This demographic shift is fueling demand for life insurance and pension products as more citizens plan for longer life expectancies. Digital transformation is also reshaping the industry. Insurers are collaborating with tech firms to develop cost – effective digital sales channels, replacing traditional agent – based models. They are also using generative AI and wearable tech to enhance wellness – linked policies that offer rewards for healthy activities. Chauhan said the Japanese life insurance market has a positive outlook, driven by digital distribution solutions and product innovation. However, interest rate fluctuations, the declining birth rate, and global market volatility will remain areas of focus for Japanese life insurers over the next five years.
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