Page 17 - Insurance Times February 2022

themselves or their families if they Analyst at GlobalData, comments: these segments, which will support
were to fall sick and be out of work and “The Japanese general insurance mar- their demand over the next few years.”
short of income for an extended period ket has been dominated by four lead-
of time.” ing insurers, which accounted for 87% Insurance industry adop-
of the net written premiums (NWP) in
GlobalData’s survey also reveals that tion of environmental, so-
2020. The combined premiums of the
accident and sickness cover was the
most purchased type of personal in- top four insurers contracted by 0.2% in cial and governance prac-
come protection policy in 2021 with a 2020 due to a decline in motor insur- tices driven by long-term
44.6% purchase share. ance premium, driven by a reducing
vehicle sales and reduction in premium climate change
Of all income protection products sold, rates over the previous years.” Environmental, social and governance
55.4% provide cover against redun- (ESG) practices have become more than
According to the Statistics of Japan,
dancy – either unemployment insur- a buzzword, with businesses across all
traffic accidents have decreased at a
ance or comprehensive income protec- market sectors including the insurance
CAGR of 12.7% during 2016-2020,
tion. In addition to providing unemploy- sector, making efforts to adopt and in-
ment cover, comprehensive policies which prompted insurers to reduce tegrate ESG practices into their day to
also offer protection in the event the premium on compulsory motor third- day operations, says GlobalData, a lead-
policyholder becomes unable to work party insurance twice during the last ing data and analytics company.
because of sickness or an accident. five years. Declining premium has im-
pacted growth of motor insurers, A recent GlobalData insurance indus-
Benito adds: “Soon after the onset of which were already facing pressure try poll revealed that most respon-
the pandemic, insurers temporarily dents (21.6%) believed that managing
due to sluggish business environment
withdrew unemployment cover as the and declining vehicle sales. As a result, the long-term risks of climate change
prospect of high unemployment motor insurance declined at a CAGR of is the main driver for the adoption and
loomed. Had they not discontinued integration of ESG practices in the in-
0.3% during 2016-20. The share of
products temporarily, the proportion motor insurance business for the top surance sector. A slightly lower propor-
of income protection policies ac- four insurers declined from 63.3% in tion of respondents 20.2% cited that
counted for by unemployment cover 2016 to 60.5% in 2020. the incorporation of such practices was
would be significantly higher today. already a key part of their company’s
On the other hand, property insurance values and ethics and a further 19.2%
While societies around the world learn
premium rates registered double-digit of respondents felt that ESG provided
to live with the virus, new variants con- growth in 2020, and subsequently be-
tinue to create economic uncertainty, an opportunity for insurance busi-
came the focus area for general insur- nesses to differentiate themselves
impacting consumer behavior. As such, ers. Property insurance segment grew
COVID-19 will continue to drive interest at a CAGR of 5.2% during 2016-2020, from the competition.
in income protection products over the driven by increase in reinsurance pre- The impact of climate change is par-
medium to long term.” ticularly damaging to insurers, prompt-
mium rates and increased risks associ-
ated with natural catastrophic (Nat- ing them to adopt ESG practices of
General insurers in Japan cat) events. Consequently, property their own to mitigate some of the risks
involved, rather than being forced to
shift focus from motor to insurance share within total premium through regulation or legislation.
for the top four insurers increased
property and specialty from 12.9% in 2016 to 15.2% in 2020. Beatriz Benito, Senior Insurance Ana-
lines Apart from property insurance, insur- lyst at GlobalData, comments: “The
insurance industry faces a future of
In a highly concentrated Japanese gen- ers are also focusing on specialty insur- escalating costs and the consequence
eral insurance market, insurers are ance lines such as cybersecurity, event of ever-increasing severe weather
changing their focus towards property cancellation, and business interruption. events and natural disasters, which will
and specialty lines due to decline in Sahoo concludes: “With the country’s only worsen with climate change. An
motor insurance premiums, finds vulnerability to natural catastrophic increasing volume of claims – more
GlobalData, a leading data and events and increasing cybercrime cases, often than not associated with big
analytics company. insurers are expected to be more ag- payouts – will eventually make some

Swarup Kumar Sahoo, Senior Insurance gressive with product innovation in areas of land uninsurable.’’ T

The Insurance Times, February 2022 17