Japan’s general insurance industry saw underwriting strengthen in FY2025 as direct premiums written rose 3.82% to JPY10.74 trillion (US$66.22bn) while direct claims paid fell 1.20% to JPY5.38 trillion, driven by lower fire losses and continued premium growth in commercial lines.
The divergence between premium growth and claims development points to more favourable underwriting conditions than in recent years. The industry added nearly JPY395.8bn of premium during FY2025, building on the momentum seen in FY2024 when premiums rose 4.30% to JPY10.34 trillion.
Meanwhile, claims declined by around JPY65bn from FY2024 levels, reversing the modest 1.46% increase recorded a year earlier.
FY2025 reflects stronger underwriting fundamentals than in recent years. After expanding 3% in FY2022, premium growth turned negative in FY2023 before rebounding strongly over the past two fiscal years. Premiums have now exceeded JPY10 trillion for two consecutive years.
On the claims side, FY2022 remains the most loss-intensive year of the period under review, with claims jumping 11.52% to JPY5.51 trillion. Since then, claims have moderated, declining in both FY2023 and FY2025 despite underlying inflationary pressures affecting repair and replacement costs.
The market’s premium base has expanded by around JPY1.11 trillion since FY2020, equivalent to cumulative growth of 11.6%. Over the same period, claims increased by only JPY271bn, or 5.3%.
FY2025 also saw increased regulatory scrutiny following a series of misconduct cases involving fraudulent claims, pricing practices and data leaks. The General Insurance Association of Japan (GIAJ) introduced tighter guidelines on the secondment of employees and also updated its guidance on agency sales practices to promote accountability within the sector.
Earlier this year, Kentaro Mukoyama, Associate Director, Financial Services & International Public Finance Ratings at S&P Global Ratings, said that the Japanese non-life sector is generally demonstrating good performance, despite the changing business environment.
Lines that fired the growth
Business-line data shows that much of the underwriting strength came from commercial and property-related segments.
Fire insurance was the standout performer in FY2025. Premiums rose 6.1% year-on-year to JPY2.18 trillion, the highest level in the six-year period under review and the second consecutive year of strong growth following a 9.9% increase in FY2024.
At the same time, fire claims fell 11.2% to JPY732.7bn, extending a three-year decline from a peak of JPY1.29 trillion in FY2022. The line was the largest contributor to the industry’s improved claims experience during the year.
The improvement was driven largely by ordinary fire business. Premiums in the segment increased 7.3% to JPY1.80 trillion, while claims declined 7.6% to JPY715.0bn, suggesting insurers’ repricing efforts are translating into stronger underwriting outcomes.
Earthquake insurance generated the most significant claims improvement. Claims plunged 66.4% to JPY16.9bn from JPY50.2bn a year earlier, while premiums increased 2.3% to JPY374.4bn. The sharp decline points to a significantly lighter catastrophe-loss environment than in FY2024.
In June, AM Best said that Japan’s non-life insurance segment continues to benefit from tighter underwriting terms supporting profitability in the fire insurance segment.
Motor insurance, the market’s largest line, also remained a significant contributor to premium growth but the claims continued to rise.
Premiums increased 4.9% year-on-year to JPY4.70 trillion, while claims rose 2.4% to a record JPY2.73 trillion. Despite the increase in losses, premium growth outpaced claims growth, indicating pricing remained ahead of loss-cost inflation.
The segment accounted for nearly 44% of total industry premiums in FY2025 and remained the largest source of claims for Japanese general insurers.
Miscellaneous insurance also supported underwriting performance. Premiums increased 1.3% to JPY1.90 trillion, while claims declined 3.6% to JPY846.8bn, reinforcing the broader trend of commercial lines generating stronger underwriting outcomes.
Quarterly momentum weakens towards year-end
Quarterly trends suggest underwriting momentum moderated during the final months of FY2025.
Direct premiums written increased 3.7% year-on-year in the June quarter and 3.1% in the September quarter before accelerating temporarily to 5.6% in the December quarter. Growth then slowed sharply to 2.95% in the March quarter, the weakest quarterly increase of the fiscal year.
Claims performance followed a similar trajectory after declines of 4.1% in the June quarter and 2.2% in the December quarter, but rose 0.98% year-on-year in the March quarter to JPY1.31 trillion, making it the only quarter of FY2025 to record an increase.
The FY2025 performance leaves Japan’s non-life market entering FY2026 with stronger underwriting fundamentals than in prior years. However, the most recent quarterly numbers signal pressure on underwriting gains achieved in the completed fiscal.
GIAJ Chairman Koji Ishikawa recently said the sector is entering a critical phase as climate risks intensify and cyber threats become increasingly sophisticated. According to Ishikawa, a key priority for FY2026 will be demonstrating that industry reforms are delivering measurable improvements in practice.
