The latest Expertise Publication from the Swiss Re Institute reviews key trends shaping the commercial risk segment in Japan.
The main findings of the paper include:
The commercial insurance market in Japan is the fourth largest in the world. Premiums were USD 38 billion in 2016, but penetration is still low relative to some other advanced markets.
By line of business, motor is by far the largest line of business, followed by property and liability.
In 2017, commercial insurance premiums are estimated to have risen by 2.7%, after just 0.5% growth in 2016. The gain came alongside improved economic performance.
The positive momentum is set to continue, with premiums forecast to grow by 4.7% in 2018.
Awareness of business interruption (BI) as core to corporate risk management is increasing, but Japanese companies remain under-insured for BI risk scenarios. Among insurable risks, natural catastrophes and cyberattacks – both core to BI scenarios – are among the top risks cited by Japanese corporations.
Globalisation, resulting in longer and more complex supply chains, is another BI risk scenario.
Data analytics and innovative product design have extended the scope of insurability of commercial exposures to BI, and also contingent business interruption and non-physical damage business interruption risks.
This is an important growth area for commercial insurance, with solutions moving from asset and balance sheet covers, to protection for earnings and cash flow risks.