Insurance industry growth in South Korea

GlobalData calculates a rise in DWP from KRW220.5 trillion ($186.8 billion) in 2020 to KRW262.5 trillion ($229.5 billion) in 2025, with a compound annual growth rate (CAGR) of 3.5 per cent.

“After growing by 4.2 per cent in 2020, the industry is expected to contract by 0.4 per cent in 2021. The decline is mainly driven by life insurance segment, which is expected to contract by 2.5 per cent due to the persistent low-interest-rate environment, reduced disposable income due to the Covid-19 pandemic, and an aging population,’’ said Anjuli Srivastav, Insurance Analyst at GlobalData.

Life Insurance

In 2022, GlobalData expects to see growth of 1.9 per cent in the life insurance sector, which in 2020 made up 54 per cent of the industry’s DWP in South Korea. This is due to health insurance products becoming more popular following the pandemic, said GlobalData, with a heightened awareness for health and economic recovery.

“Maintaining strict solvency and capital requirements for annuity insurance products under the upcoming IFRS-17 and K-ICS regulations will prompt insurers to shift their focus towards protection-type products over the next few years. As a result, life insurance is expected to grow at a CAGR of 1.6 percent during 2020-2025,” said Srivastav.

General Insurance

‘An increase in motor premiums and improved underwriting performance of general insurers’ caused growth of seven per cent in the general insurance section in 2020, said GlobalData. That year the sector made up 46 per cent of the total DWP. GlobalData predicts a drop to 3.8 per cent growth in 2022 caused by economic problems generated by the pandemic.

Renewable energy

Plans to support renewable energy projects in South Korea remain in place. In June 2021, insurers including Hyundai Marine & Fire Insurance, Hana Insurance, DB Insurance, and Hanwha General Insurance Underwriting announced they would no longer provide construction and operational cover for new projects involving coal, a nonrenewable energy resource, said GlobalData.

GlobalData projects that investing in renewable energy will positively impact underwriting performance in the next few years.

Srivastav concluded: “The outlook for the South Korean insurance industry looks positive driven by economic recovery, increased investments by insurers in digital transformation, ESG related initiatives, and positive regulatory environment.”