07 Sep 2020
Posted in Insurance
Heavy reliance on life to slow growth prospects of leading insurers in Japan, says GlobalData
The top 10 Japanese insurers have a strong dependence on the individual life insurance business, which will make them vulnerable to the rising claims and declining investments. This over-reliance on one product will definitely slow down the growth of the insurance industry, says GlobalData, a leading data and analytics company.
The leading five players (Nippon Life, Japan Post Insurance, Meiji Insurance, Sunitomo Life and Dai-ichi Life) are particularly reliant on life insurance. The sixth and seventh-placed insurers, Tokio Marine and Sompo Japan Nipponkoa, appear well- placed to increase their market share, as they are largely reliant on motor and property insurance, two lines which are not expected to see large increase in claims.
However, Japan has not been hit as hard as many other countries by COVID-19 and the insurers will therefore be better placed to deal with the fallout. However, its life insurers will still be impacted by the volatility in the global investments.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “The top 10 insurers generate 77% of business from life and pensions. Seven of the top 10 insurers generate all of their business from these lines. Dependence on life insurance makes most of the top insurers vulnerable to the expected stagnancy in premium growth, as well as low investment returns prevalent in the business.
“The top 10 life insurers account for 69% of the individual life insurance business. This means the life insurance business is dominated by its key players. The insurers are likely to be impacted by the slowdown underway in this business, both due to low returns and stagnant premium growth. Japan Post and Nippon Life appear the most exposed in this regard.”