Japan Car Insurance Market

Japan Car Insurance Market Analysis

The Japan Car Insurance Market size in terms of direct written premiums value is expected to grow from USD 21.37 billion in 2025 to USD 27.55 billion by 2030, at a CAGR of 5.21% during the forecast period (2025-2030).

Under the law of Japan, all registered vehicles must be covered with compulsory automobile liability insurance to protect third parties from accidental injuries. These compulsory car insurances do not exist with coverage to the insured, property damage to third parties, and repair or replacement for the damaged vehicles, creating a market gap in car insurance products and providing an opportunity for insurance companies to launch their customized car insurance products. Post-COVID-19, net premiums written for compulsory automobile liability insurance in Japan observed a decline last year and increasing premiums of alternative car insurance products.

Unit sales volume of new passenger cars in Japan is observing an increase, with SUVs, Mini cars, and medium cars occupying a significant share of more than 60% in the overall sales, resulting in car insurance providers focusing on specific segments of cars on the other hand sales of used passenger cars are observing a decline and impacting their insurance business. Rising car safety norms and fewer car accidents in Japan are leading to declining insurance premiums on car insurance making it convenient for car owners to purchase from a varied segment of available car insurance products.

Rising technological and digital innovations are leading car insurance products in a new direction. Insurtech penetration in Japan Non-life insurance industry is observing a continuous rise, leading to an increasing number of car insurance providers coming up with online car insurance services to buy, renew, and claim car insurance. Telematics or usage-based insurance, which makes the insurance company calculate premium rates based on data generated from driving behavior, minimizes the asymmetric information and moral hazard issues between the buyers and insurers. Japan's telematics insurance market size has observed a continuous rise over the years and is expected to create rapid growth in Japan's car insurance market.

Japan Car Insurance Market Trends

Rising Gross Written Premium with Declining Insurance Premium Rates

Japan has observed a continuous decline in car insurance premium rates being offered and charged by insurance companies, resulting in an increasing number of car insurance being purchased by car owners and gross written premiums of car insurance providers. Almost 24% of the people in Japan consider the aspect of low premiums when buying car insurance. Compulsory and Optional car insurance exist among the two types of car insurance products existing in Japan. Compulsory car liability insurance has a lower value of compensation claims and a 10% share in non-life insurance gross written premiums, with optional car insurance products having slightly higher insurance premium rates and a share of 45% in non-life insurance gross written premiums. As a result of declining car insurance premium rates, net premiums written on voluntary automobile accidents in Japan are observing a continuous rise with a declining trend for compulsory automobile liability insurance, which exists with a lower value of the claim. These trends are resulting in car insurance providers coming up with more customized car insurance products in the market.

Rising Digital Innovation

With digital innovation insurance industry in Japan is continuously expanding. The adoption of artificial intelligence-enabled tools, data analytics, and other online platforms is resulting in Japanese car insurance providers coming up with products designed as per the emerging market demand. Online channels of direct insurer websites or their application platforms are increasing the number of car owners buying, renewing, and claiming their car insurance online. Telematics or usage-based insurance is launched by Japanese insurance providers where the insurance premium rates are calculated based on the data collected from the vehicle leading to its market value last year and is expected to rise with further digital innovations. Continuous innovations in online insurance products are leading to insurance companies coming up with metaverse-based solutions where the user can communicate directly with the insurer during sales of car insurance products.

Japan Car Insurance Industry Overview

Japan's car insurance market is fragmented, with a large number of players existing in the market. Existing loopholes of compulsory car insurance in Japan are leading to insurance providers coming up with customized car insurance policies. Digital innovations are making it convenient for car owners to buy car insurance through direct websites and online applications of insurance providers. Some of the existing players in Japan's Car Insurance market are Tokio Marine & Nichido Fire Insurance, Mitsui Sumitomo Insurance, Sompo Japan Insurance, Aioi Nissay Dowa Insurance, and Nipponkoa Insurance.

Japan Car Insurance Market Leaders

Japan Car Insurance Market News

• December 2022: OCTO Telematics, existing as a data analytics firm for the insurance sector, launched its office in Tokyo (Japan) to strengthen its presence and expand its partnership with insurance providers. The company has a commercial partnership with Tokio Marine which is having its operation in Japan car insurance.
• January 2023: Japanese insurer Tokio Marine & Nichido Fire Insurance launched selling of its insurance products to customers through Metaverse. With the adoption of Metaverse, insurers and customers can communicate through their virtual avatars on the platform. This initiative will be used for offering car insurance products as well.