Life insurance market

Scale of the life insurance market

The Japanese life insurance industry has annual sales (≒ premium income) of 43 trillion yen, and its market size is large compared to other industries. 

Chart comparing the scale of the life insurance market compared to other industries. The market for insurance is valued at ¥43.0 trillion, banking ¥32.2 trillion, telecommunications ¥21.1 trillion, e-commerce (merchandise) ¥14.7 trillion, and non-life insurance ¥9.1 trillion.
  • Life insurance is premium income, banks are ordinary income, telecommunications is sales, EC is BtoC EC market size (merchandise sales) transaction value, and non-life insurance is net premium written. General Insurance Association of Japan "Life Insurance Business Overview Annual Statistics" (2023), Ministry of Finance "Corporate Enterprise Statistics Survey" (2022), Ministry of Internal Affairs and Communications Information and Communications Bureau "2023 Information and Communications Industry Basic Survey" (2022 results), Ministry of Economy, Trade and Industry "Market Research on Electronic Commerce" (2025), General Insurance Association of Japan "Data by Insurance Category" (2023) 

Life insurance market by numbers (indivicual insurance)

In Japan, life insurance boasts a high subscription rate of about 90% per household and 200 million contracts due to its high public nature as a social infrastructure. While it is a mature market, there is a recent trend of lower life insurance subscription rates (uninsured) among younger generations due to financial reasons and a lack of understanding of life insurance. 

Life insurance subscription rate

(households) 

89.8%

Number of policies-in-force

(end of FY2023)

194.94 million

Number of new policies

(FY2023) 

 

12.6 million

Despite needing life insurance for life events, young adults have low subscription rates.

 

(20s) (30s)
51.5% 82.2%

Life insurance subscription rate by age group

Graph showing life insurance enrollment percentage by age. Coverage for the 18-19 age group is 25.4%, for 20s 51.5%, for 30s 82.2%, for 40s 86.2%, for 50s 87.4%, for 60s 86.2%, and for 70s 75.9%.

Reasons for low life insurance enrollment among young people

 

● 1 out of 3 non-subscribers cite "financial reasons"

● Issues with understanding the necessity of life insurance

Reasons for non-subscription to life Insurance (20s to 30s)

Figure showing the reasons people in their 20s and 30s said they have not taken out life insurance. 36.3% said they can’t not afford it, 29.7% said they do not feel the need for life insurance, 21.4% said there was no particular reason, 19.8% said they don't fully understand life insurance, and 18.6% said insurance premiums are high.
  • Source: General Insurance Association of Japan "Life Insurance Business Overview Annual Statistics" (2023), Life Insurance Culture Center "2022 (Reiwa 4) Survey on Life Security" 

Changes in subscription channels and the future

The percentage of people subscribing to life insurance through insurance company sales representatives has been high for a long time, but customer needs for subscription channels are diversifying, with online channels and insurance agencies among the channels they would like to use in the future. 

Past and future trends in life insurance subscription channels*1

Chart showing a breakdown of the sources of insurance subscription and the future preferred subscription source. A high percentage of insurance products continue to be purchased from insurance company sales staff, but demand is growing for purchases online and at insurance agencies.
  1. The Japan Institute of Life Insurance "Survey on Life Protection"

＊ Source: Survey on Life Protection by the Japan Institute of Life Insurance

Characteristics of the life insurance business

Stock business with a solid foundation and high stability

Life insurance is a subscription-type business that continuously collects premiums from customers who have signed up for extended periods of time.

 

We consider life insurance to be a recurring revenue business because it has a solid business base and stable operations that are resilient to external factors, exhibits revenue growth as the number of policies increases, and is subject to low cancellation and lapse rates due to its highly public nature.

Stock business (ex. insurance, information and communications)

Graph showing the income trend of recurring income businesses, like the insurance and telecommunications businesses. A speech bubble emphasizes that revenue steadily and easily builds over time.

Flow business (ex. restaurants, retail)

 

Graph showing an example of an income trend of a flow businesses, like restaurants or retail businesses. A speech bubble emphasizes that revenue fluctuates widely and does not accumulate over time.

Businesses that benefit from economies of scale

Life insurance companies, due to being in the "capital-intensive industry," require very large initial investments, such as large-scale equipment investment in the early stages of establishment. On the other hand, one of the characteristics of life insurance companies is that as the number of contracts held accumulates and the scale of the business expands, it becomes possible to reduce the unit cost per contract and conduct efficient business operations that take advantage of economies of scale.

Graph showing the relationship between the number of insurance policies and the business expense ratio. As the number of insurance policies increases, the business expense ratio decreases. A green bar graph shows a rising number of insurance policies, and a brown line shows the decline in the business expense ratio. A dotted line shows how the business expense ratio can be expected to continue declining as the number of insurance policies continues to rise.