In the second quarter of 2024, the Japanese insurance sector faced moderate market conditions, marked by persistent challenges in underwriting results. According to Aon’s Insurance Market Insights, both the property and liability segments, particularly those involving US exposures, experienced continued difficulties, prompting a reevaluation of risk retention and transfer strategies.
Pricing pressures were evident, with most risks renewing at stable rates except for property and casualty (P&C) and liability placements involving US risks, which saw price hikes. Overall, insurance capacity remained constrained, particularly for P&C placements.
Local insurers increasingly focused on profit-driven underwriting, leading to stricter standards and a greater reliance on foreign insurers and reinsurers. Property placements saw reduced limits, often requiring coinsurance to bridge gaps, while expiring deductibles were generally available, though some insureds opted to increase deductibles to manage rising premiums. Coverage terms largely remained stable, with PFAS exclusions becoming a common requirement.
In terms of product trends, domestic insurers displayed cautious underwriting and capacity management. Risks with substantial US exposure or high limits faced moderate rate increases, alongside mandated PFAS and punitive damages exclusions. The cyber insurance market remained challenging, with international pricing high but stable, while domestic rates showed some decrease.
Directors and officers insurance saw increased capacity from several international insurers, maintaining favorable expiring terms. Property insurance price increases from Q2 2019 persisted into Q2 2024, with domestic insurers maintaining stringent underwriting practices and limited capacity for fire and flood risks.
