Typhoons hit Japanese non-life market in 2018, Toa Re report finds
The Japanese non-life insurance market experienced a mixed year in 2018, according to a report from the underwriting and planning department of Toa Reinsurance.
According to the report, “Trends in Japan’s Non-Life Insurance Industry”, net premium income in all lines of business increased ¥12 billion ($110.5 million) from the previous fiscal year to reach ¥8,393 billion.
Paid net claims increased by ¥622 billion to ¥5,324 billion due to the impact of typhoons and other natural disasters in Japan. As a result, the loss ratio for the fiscal year 2018 increased by 7.6 percentage points to 69.1 percent.
Looking at the market, Toa Re claimed that new advances in automated driving technology are projected to result in a reduction in the volume of automobile insurance sales. This is a concern for a market where automobile insurance currently accounts for about half of net premium income of direct non-life insurance companies. This is just one of the challenges likely to impact market growth, the report said.
“Under these circumstances, non-life insurance companies in Japan are developing markets by providing new products and services aligned with changing customer needs. They are implementing initiatives to increase operating efficiency to achieve sustainable growth,” the report’s authors stated.
In addition, the report said, Japan’s non-life insurance companies had used reinsurance coverage and reversed catastrophe loss reserves to generate stable earnings in the fiscal year 2018. These earnings were achieved in spite of a number of natural disasters that included several typhoons.
Expenses for this segment of the sector decreased by ¥10 billion to ¥2,725 billion, while the net expense ratio decreased 0.1 percentage points to 32.5 percent.
However, the report added, underwriting profit decreased by ¥87 billion to ¥193 billion. Ordinary profits, calculated as the sum of underwriting profit and investment profit, increased by ¥52 billion to ¥864 billion. After deducting tax expense, net income decreased by ¥2 billion to ¥676 billion.
