Japanese insurers received favorable terms and pricing cuts during the reinsurance renewal season on April 1, supported by strong financial results, a lack of major catastrophe losses and ample underwriting capacity, according to global brokerage group Aon.
According to Aon’s April 2026 Renewal Reinsurance Market Dynamics Report, which explores the Japan-centric 1.4 renewal season, interest in frequency protection is expected to grow in Japan as more attractive pricing levels become available.
The report highlights that reinsurance demand remains stable, supported by the strong financial position of Japanese insurance companies.
Recent regulatory reforms targeting governance and risk management have triggered a period of higher insurance pricing and underwriting actions, as well as the sale of cross-shareholdings.
Combined with the absence of major catastrophic events since 2019, these factors have allowed insurers to maintain healthy profits and strong capital levels, the broker noted.
As a result, there was ample capacity on April 1, driven by existing reinsurers seeking to maintain or expand their portfolios. In addition, the relative weakness of the yen against other major currencies has also contributed to the oversupply of reinsurance capacity.
Despite the competitive environment, insurers have prioritized long-term relationships, resulting in little change to the existing reinsurer panel.
Importantly, terms and conditions (T&Cs) are largely stable, with Aon noting that while most insurers have retained add-on points and limits, some have adjusted limits and others have reduced purchase limits.
Frequency products are now more widely available; Japanese buyers may find revenue protection attractive due to pricing, the report said.
In addition, Aon obtains prepaid recovery on top of the catastrophe excess loss plan, which is priced 15% to 18% lower if the insurance company requires it.
While terms and conditions remained stable, there were significant declines in pricing in several key areas.
Aon further stated that demand for proportional reinsurance treaty solutions from reinsurers has continued to increase since April 1. Since 2023, rate hikes and underwriting shifts in the primary market have increased reinsurer interest in proportionality agreement business covering fire and earthquake risks. Increased competition and strong performance by insurance companies have led to higher commissions, typically between 3% and 5%.
Nick Bayman, president of reinsurance for Aon Japan’s London team, noted: “The reinsurance market has a greater role to play in supporting our clients’ future growth.
“Japan still has significant protection gaps, particularly in the earthquake area. We are working with insurance companies to find ways to help them better support their customers, including using parametric insurance and other innovative capital solutions.”
In terms of risk excess losses (domestic only and combined with overseas/JIA risks), Aon saw similar favorable results to other business areas.
Improvements in original underwriting and increased reinsurer interest as well as stable market buying resulted in premium reductions of approximately 10%.
Also on April 1, Aon reported that the casualty reinsurance market was in good shape, although the decline was more modest than in property and casualty insurance. Significant improvements in the strategic use of primary underwriting and interim reinsurance solutions for North American exposures have made the Japanese casualty treaty business more attractive to reinsurers, resulting in high single-digit to low double-digit reductions at renewals.
Robust governance and risk management, coupled with the unwinding of large cross-shareholdings, have encouraged major Japanese non-life insurance companies to continue to expand into overseas markets and diversify their investment portfolios.
Sompo Holdings completed its acquisition of specialty insurer and reinsurer Aspen in February, and Mitsui Sumitomo Insurance Company acquired a 15% stake in US insurance company WR Berkley in March.
As a result, Japan’s large insurers are taking a more joined-up approach to reinsurance and managing global reinsurer relationships more prudently, the report concludes.
Philippe Sommer, CEO of Aon Re Japan, commented: “Once the dust settles on renewals on April 1, we will work with insurance companies to further optimize their reinsurance purchases and make their coverage even better for them.
“Losses have been relatively light over the past two years and Japanese insurers have not yet felt the pressure, but history tells us that losses will come back and insurers currently have large retentions. There is so much capital and appetite in the reinsurance market that now is the time to buy retentions and consider frequency insurance.”
