, Japan
461 views
Photo credits to GlobalData.

Japanese insurers to face stagnant growth in the next five years

Sluggish sales of term life and savings products are slowing down the industry.

Japan’s life insurance industry is expected to grow at a compound annual growth rate (CAGR) of 2.6% from $274.9b in 2021 to $313.3b in 2026, in terms of direct written premiums (DWP), data and analytics firm GlobalData predicts.

However, the industry will see stagnant growth in the next five years due to sluggish sales of term life and savings products.

According to GlobalData, the Japanese life insurance industry registered 2.4% growth in 2021 after two consecutive years of decline in 2019 and 2020. Past 2021, however, the industry will only increase by a few percentage points, reaching only 3.1% by 2026.

ALSO READ: FWD launches new critical illness cover for Singaporeans

Ashish Raj, Insurance Analyst at GlobalData, said that 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.

“A persistent low-interest rate environment since 2010 due to a stagnant economy has prompted insurers to reduce the sales of savings products offering guaranteed 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,” Raj said.

Another challenge for life insurers is the reliance on agency or brokers’ distribution channels, which traditionally accounted for the majority share of life insurance sales. A less developed digital sales channel led to a decline in sales during the last couple of years, specifically after the disruption caused by the COVID-19 pandemic.

To avoid such disruptions in the future, the Japanese government established the Digital Agency in the second half of 2021. The agency will support life insurers in reducing their dependence on traditional sales channels and moving to digital distribution.

“However, insurers must continue to focus on implementing cost-effective digital distribution solutions and launching new products for growth,” Raj said.
 

Follow the link for more news on

Join Insurance Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Filipino gamers hold promise for FWD
The insurer plans to support other games and aspects of the gaming ecosystem beyond esports.