Automobile insurance premiums in Japan are slated to increase in 2026 due to rising traffic accidents and escalating repair costs driven by inflation.
The General Insurance Rating Organization of Japan, a body representing non-life insurers, plans to hike its reference premium rates for optional insurance by an average of 5.7%, sources told The Japan News on Monday.
Insurance companies in the country are anticipated to adopt the new reference rates in their premiums starting January 2026.
The rating organisation conducts an annual review of its reference rates based on insurance payment data and other relevant factors. It will soon submit the planned rate increase, which responds to higher payment trends, to the Financial Services Agency.
In another part of Asia, the Chinese motor insurance market is forecast to grow at a compound annual growth rate (CAGR) of 5.4% – with gross written premiums (GWP) projected to rise from CNY 912.2 billion (US$127.4 billion) in 2024 to CNY 1,125.7 billion (US$158.9 billion) by 2028, according to data from GlobalData.
Research from the data and analytics firm’s Insurance Database indicates the sector will expand by 5.2% in 2024, bolstered by increasing vehicle sales, a surge in demand for new energy vehicles (NEVs), and favourable regulatory developments.
“The Chinese motor insurance market has witnessed a consistent growth of 5.6% in 2022 and 2023 after declining by 5.7% in 2021. The recovery in the economy after the prolonged impact of COVID-19 and rising vehicle sales has supported the growth of motor insurance. The trend is expected to continue in 2024 and 2025,” said Sutirtha Dutta, an insurance analyst at GlobalData.
The China Association of Automobile Manufacturers (CAAM) reported a 10.6% increase in vehicle sales in the first quarter of 2024, reaching 6.72 million units.
“The sale of NEVs has shown considerable growth in the last couple of years, driven by the government’s push towards switching from internal combustion engine (ICE) vehicles to electric vehicles. The higher motor insurance premiums on EVs and hybrid vehicles due to their costly batteries and spare parts will support motor insurance growth,” Dutta said.
To encourage NEV adoption, the government announced in June 2023 a 10% purchase tax exemption up to CNY 30,000 (US$4,188.5) for vehicles bought from Jan. 1, 2024, to Dec. 31, 2025. Additionally, a CNY 10,000 (US$1,396.2) vehicle trade-in subsidy was introduced in April 2024.
CAAM data indicated that NEVs accounted for 30% of total vehicle sales in the first ten months of 2023, with China’s global market share for new energy passenger vehicles increasing from 41% in 2020 to 65% in 2023.
