Japan’s motor insurance sector is projected to reach JPY6.2 trillion (around US$44.1 billion) in gross written premiums by 2030, according to a recent analysis by GlobalData.
The market is expected to expand at a compound annual growth rate (CAGR) of 1.8% between 2026 and 2030, following a period of modest recovery after consecutive declines from 2021 to 2023.
In 2024, the sector recorded a 1.6% increase, with a further 1.4% rise anticipated in 2025. This recovery is attributed to several factors, including adjustments in premium rates, regulatory updates, and the introduction of telematics-based insurance products.
Insurers are also prioritising profitability, aided by technological advancements in vehicle safety, which have contributed to a reduction in accident frequency.
Market Drivers and Regulatory Changes
According to GlobalData senior insurance analyst Swarup Kumar Sahoo, the rebound in Japan’s motor insurance market is being driven by higher premium rates, increased vehicle sales, and the implementation of a risk-based rate classification system scheduled for 2025.
“The growth of motor insurance will be further supported by consumer awareness driven by rising claims from natural disasters,” Sahoo said.
Automobile sales have been a key driver of insurance demand. Data from the Japan Automobile Manufacturers Association (JAMA) shows that vehicle sales grew by 5% in the first nine months of 2025 compared with the same period in 2024, with mini passenger cars, small trucks, and large buses recording the strongest gains.
Premium increases are expected to continue, influenced by inflation-related repair costs and higher payouts linked to natural disasters. The industry anticipates a second round of premium hikes in 2025, with rates projected to rise by 6% to 8.5% in the fourth quarter.
Catastrophe Risk and Claims Experience
Catastrophe risk remains a central concern for Japan’s motor insurers. Severe weather events such as floods, typhoons, and hailstorms have driven up claims, underlining the need for adequate insurance coverage and efficient claims processing.
The General Insurance Association of Japan (GIAJ) reported that the August 2025 Kyushu–Yamaguchi floods resulted in nearly 17,000 auto claims, totalling around US$87 million. Similarly, a hailstorm in Hyogo in 2024 generated claims worth US$590 million.
In response, insurers are prioritising disciplined underwriting and managing reinsurance capacity amid rising catastrophe losses.
The introduction of a risk-based and model-specific rate system in January 2025 will enable insurers to price premiums based on the make and model of each vehicle.
“This granular classification allows insurers to more accurately price the risk profile associated with each vehicle model, taking into account accident frequency, repair costs, and claims history unique to that model,” Sahoo said.
Technology and Product Innovation
The shift towards electric vehicles and connected technologies is driving insurers to develop new products and pricing models.
Usage-based insurance, telematics-enabled solutions, and AI-driven claims platforms are being adopted to better differentiate risk and improve service delivery.
Initiatives such as the Drive Agent Personal telematics plan, which leverages dash cams and incident video, are expected to enhance claims resolution and promote safer driving behaviours for both electric and traditional vehicles from January 2026.
Sahoo stated that the industry is well-positioned for sustainable expansion, supported by regulatory modernisation and continued investment in technology and product development.
“Insurers that invest in technology, product innovation, and robust risk management will gain a competitive advantage in the years ahead,” he added.
General Insurance Sector Anticipates Record Premiums
Japan’s general insurance industry is also forecast to grow, with gross written premiums expected to reach JPY14.5 trillion (US$102.6 billion) by 2030, according to GlobalData.
The sector is projected to expand at a 3% CAGR from JPY12.5 trillion (US$85.4 billion) in 2025.
A 3.7% annual increase is expected in 2025, driven by renewed demand for motor insurance, higher catastrophe-related losses, premium adjustments, and ongoing digital transformation.
Motor, property, and liability insurance are anticipated to account for more than 80% of total gross written premiums in 2025, with motor insurance alone representing 46% of the market.