Big Japanese insurers have also built stronger balance sheets due to strong profits.
Japan’s April 2025 reinsurance renewals showed further declines in property catastrophe rates, marking the end of the hard market across Asia-Pacific, according to AM Best.
Howden Re reported that Japanese property catastrophe excess-of-loss programmes saw risk-adjusted rate cuts of 10% to 15%, along with better contract terms.
“The Best’s Market Segment Report, Asia in Focus: A Two-Way Street for Reinsurance Diversification” said this was due to strong competition, with both new and existing reinsurers providing ample capacity.
Large Japanese insurers have also built stronger balance sheets by posting solid profits and reducing domestic equity holdings.
This allowed them to keep more risk in-house, which, together with falling rates, has shrunk Japan’s overall property-catastrophe premium pool.
Reinsurers are now eager to grow their business, which could push prices down further into the January 2026 renewals—unless a major disaster changes the trend.
Looking ahead, the planned 2027 merger of Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance is expected to combine their reinsurance programmes.
This will likely increase competition amongst reinsurers trying to secure a share of the larger business.
On the proportional side, reinsurers are paying closer attention to property pro-rata treaties as results improve.
Fire insurance reference loss costs have been raised four times since 2017, leading insurers to charge higher premiums, shorten policy terms, and increase deductibles.
These measures have improved underwriting income and loss ratios.
Japanese insurers are also turning to capital markets for catastrophe cover. Sompo Japan’s Sakura Re secured $150m in typhoon and flood protection over four years, whilst Zenkyoren’s Nakama Re issued a $100m earthquake catastrophe bond with a three-year term.
These deals show the growing role of insurance-linked securities alongside traditional reinsurance.
AloJapan.com