The Japanese motor insurance sector is forecast to expand from $39.3 billion in 2026 to $44.1 billion by 2030, supported by regulatory reforms, telematics innovation, rising vehicle sales, and improved profitability despite mounting climate-related claims.
30 Oct 2025 | 3466 Views | By Sarthak Mahajan
Japan's motor insurance industry is projected to achieve a compound annual growth rate of 1.8% between 2026 and 2030, expanding from JPY5.8 trillion ($39.3 billion) to JPY6.2 trillion ($44.1 billion) in gross written premium, according to data from GlobalData, a leading analytics firm.
The market, which experienced consecutive declines ...
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Japan's motor insurance industry is projected to achieve a compound annual growth rate of 1.8% between 2026 and 2030, expanding from JPY5.8 trillion ($39.3 billion) to JPY6.2 trillion ($44.1 billion) in gross written premium, according to data from GlobalData, a leading analytics firm.
The market, which experienced consecutive declines from 2021 to 2023, recorded 1.6% growth in 2024 and is expected to post a modest 1.4% increase in 2025, according to GlobalData's Global Insurance Database.
Recovery Driven by Multiple Factors
Japan's motor insurance sector is entering a recovery phase characterized by premium rate adjustments, regulatory changes, and technological innovation. Enhanced vehicle safety features have contributed to a reduction in road accidents, which is expected to improve insurers' profitability.
"Within Japan's broader general insurance landscape, motor is rebounding on higher premium rates, rising vehicle sales, and the introduction of a new risk-based rate classification in 2025," said Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData. "The growth of motor insurance will be further supported by consumer awareness driven by rising claims from natural disasters."
Vehicle Sales Provide Support
Rising automobile sales are expected to bolster motor insurance growth through 2030. The Japan Automobile Manufacturers Association reported that vehicle sales increased 5.0% during the first nine months of 2025 compared to the same period in 2024. Mini passenger cars saw an 11% increase, small trucks grew 10%, and large buses surged 22%.
Insurance premium rates are also rising due to inflation-driven repair costs and increased payouts from natural disasters. Following rate increases in January 2025, premiums are expected to rise by an additional 6% to 8.5% in the fourth quarter of 2025.
Climate Risks Shape Market Dynamics
Natural disasters continue to significantly impact Japan's motor insurance sector. Vehicle damage from floods, typhoons, and hailstorms has elevated claims volumes and highlighted the importance of adequate coverage.
The General Insurance Association of Japan reported that the August 2025 flooding in Kyushu-Yamaguchi alone resulted in nearly 17,000 auto claims totaling approximately $87 million. A 2024 hailstorm in Hyogo generated auto claims worth $590 million. These catastrophic events have prompted insurers to prioritize disciplined underwriting amid elevated losses and reinsurance pressures.
Regulatory and Technological Innovation
A new risk-based rate classification system introduced in January 2025 is expected to support market growth. The system determines insurance premiums based on the specific make and model of vehicles, rather than applying uniform rates across broad categories. This approach allows insurers to price risk more accurately by considering factors such as accident frequency, repair costs, and claims history specific to each model.
"The introduction of the risk-based rate classification and model-specific rate system, effective January 2025, will support motor insurance growth," Sahoo noted.
Electric vehicle adoption and technological advancement are also reshaping the industry. Insurers are expanding EV-focused products and usage-based pricing models. Telematics-enabled solutions and AI-driven claims platforms are improving risk assessment and service delivery.
New products such as the Drive Agent Personal telematics plan, which uses connected dash cams and incident video technology, are scheduled to launch in January 2026. These innovations aim to promote safer driving behaviors and expedite claim resolution for both electric and internal combustion engine vehicles.
Industry Outlook
"Japan's motor insurance industry is set for a steady, sustainable expansion, benefiting from rate adequacy, regulatory modernization, and product innovation," Sahoo concluded. "Telematics-led propositions, Insurtech partnerships, and cloud-enabled claims will raise efficiency and customer satisfaction, while improved catastrophe modeling enhances pricing precision. Insurers that invest in technology, product innovation, and robust risk management will get the competitive advantage in the years ahead."
The combination of regulatory reforms, technological adoption, and improved risk management positions Japan's motor insurance sector for measured but sustained growth through the end of the decade.