South Korean long-term and general insurance segments will record a moderate growth rate in the year 2025 according to a market segment report by AM Best. The credit rating agency said continued refinement of the country's domestic solvency standards have also helped strengthen Korean insurers' capital management.
The special report Segment Outlook: South Korea Non-Life Insurance published in June 2025 maintains its stable outlook on South Korea’s non-life insurance segment. The special report mentions additional factors and efforts to improve profitability in the former as well as in investment strategies. The rating agency, however, notes an offsetting factor of slow growth prospects and weakened underwriting profitability in the country’s auto insurance segment.
According to the special report the country’s non-life insurance industry is facing capital pressure with increasing insurance liabilities, following the Financial Supervisory Service’s (FSS) push for more realistic actuarial assumptions and a phased plan to cut discount rates until 2027, which are intended to improve credibility and comparability of insurers’ financials.
AM Best senior financial analyst Seokjae Lee said, “These ongoing regulatory changes, coupled with a decreasing trend in domestic interest rates, are expected to pose a considerable burden on insurers’ solvency, especially those with relatively weaker capital positions.
“However, AM Best expects these changes will promote economic value-based capital management for insurers to maintain sound capital adequacy across the industry.”
The rating agency expects that over the next 12 months the South Korean insurance industry will grow only moderately and there will be increased emphasis on profitability management of long-term insurance following a few years of intensified market competition. The ultimate focus will be on mitigating increasing solvency pressures.
The report says though the auto insurance segment has experienced a slowdown in its premium growth in recent years, large insurers are more likely to maintain premium growth as they benefit from fast-growing online auto insurance market due to factors such as economies of scale, strong marketing capability and digital infrastructure.
The slowdown in the motor insurance has been due to sluggish vehicle registrations and cumulative premium rate cuts to support the consumers.