Japan Commercial Insurance Market Hardens with Tightened Underwriting and Rising Pricing

Japan's commercial insurance market is undergoing a hardening phase as major domestic property and casualty insurers, representing approximately 90% of the commercial market, tighten underwriting standards. According to Aon's Q3 2025 Global Insurance Market Insights Report, pricing for commercial lines continues to increase, although the rate of property insurance price hikes has slowed. Directors and officers (D&O) insurance is an exception, showing a slight decline in pricing, while cyber insurance rates remain stable. Capacity remains constrained for property and liability lines as domestic insurers reassess their risk appetite amidst portfolio diversification efforts. In contrast, capacity for other insurance lines is sufficient. Insurers are demanding more comprehensive information during renewals, reflecting a strategic emphasis on profitability and risk management. Notably, since 2024, there has been a rise in reductions of coverage limits for large property and liability policies, alongside increased deductibles in property insurance. While deductibles in other lines have remained stable, these changes indicate a more conservative underwriting approach among domestic insurers. Additionally, some domestic Japanese insurers are introducing new policy exclusions targeting punitive damages, terrorism, and earthquake risks in casualty and liability coverages. These exclusions are prompting some clients to seek alternative coverage through foreign insurers, suggesting a reshaping of risk transfer dynamics in the market. Overall, the hard market conditions highlight an ongoing shift in underwriting discipline and market capacity in Japan's commercial insurance sector. The developments bear watching for insurers, brokers, and risk managers considering exposure and coverage options in this region.