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Insurance industry

Japan's Car Insurance Premiums to Rise 25-30% in Next Fiscal Year

Strategic Insights

— 1 min read

Drivers in Japan are in for a double hit as car insurance premiums for mandatory liability protection and optional coverage are expected to rise by 25-30% in the next fiscal year. The Compulsory Automobile Liability Insurance Council, which advises the Financial Services Agency, has agreed to a two-step premium increase, with the first hike coming in fiscal 2011 and the second in fiscal 2013. This will be the first premium increase in four years, and it will see mandatory insurance costs rising from the current 22,470 yen (US$270) for a two-year policy on a family car to around 28,000 yen to 29,000 yen by fiscal 2013.

Key Takeaways:

  • The Compulsory Automobile Liability Insurance Council has agreed to a 25-30% premium increase for car insurance in the next fiscal year.
  • Mandatory insurance costs are expected to rise from 22,470 yen (US$270) to around 28,000 yen to 29,000 yen by fiscal 2013.
  • The premium increase is a two-step process, with the first hike coming in fiscal 2011 and the second in fiscal 2013.
  • Insurance companies are planning to charge more for voluntary car insurance, with Sompo Japan Insurance Inc. raising premiums by an average of 1.5% from April.
  • Other insurance companies, such as Tokio Marine & Nichido Fire Insurance Co. and Mitsui Sumitomo Insurance Co., are also planning to institute similar premium increases.
  • The premium hikes will hit drivers from two directions at once and add to the troubles afflicting auto dealerships and trucking firms.

Statistics:

  • Mandatory insurance costs: 22,470 yen (US$270) for a two-year policy on a family car.
  • Expected cost by 2013: 28,000 yen to 29,000 yen.
  • Premium increase: 25-30% in the next fiscal year.
  • Payouts to accident victims: expected to exceed 830 billion yen in the current fiscal year.
  • Premium revenue: about 600 billion yen in the current fiscal year.
  • System's deficit: more than 200 billion yen since fiscal 2008.

Sources:

  • "Car insurance premiums to rise 25-30% in next fiscal year: Compulsory Automobile Liability Insurance Council agrees to two-step increase" (Nikkei)
  • "Sompo Japan Insurance Inc. to raise premiums by an average of 1.5% from April" (Sompo Japan Insurance Inc.)

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