Magazine Table of Contents
The prolonged economic recession, falling interest rates and the recent MERS outbreak in the country are casting a gloom over South Korea's insurance industry's outlook. While acknowledging that the going is tough, insurers are still optimistic. They are finding growth in new risks such as cyber liability, online motor as well as new opportunities such as going overseas to new emerging markets. So the adage applies here - when the going gets tough, the tough get going.
Life insurers are facing falling demand for insurance as consumers are affected by a prolonged economic recession and falling interest rates. The regulator has been working to assist the industry in looking outside the country with the introduction of a series of measures in 2014, but these are still not enough, says Mr Soo-Chang Lee, Chairman and CEO of the Korea Life Insurance Association (KLIA), as he urges more regulatory relaxation, not only for companies going overseas but for insurers in the country.
With interest rates at an-all time low, sluggish economic growth and changes in demographics signalling profound changes in demand, Korean general insurers are ramping up their allocation to alternative investments and will need to look toward new opportunities to sustain growth, Mr Chang Nam-sik, Chairman and CEO of the General Insurance Association of Korea (GIAK) told Asia Insurance Review.
Two foreign general insurers with operations in South Korea give their take on the market. The insurers discuss growth opportunities, challenges, strategy, and share that the Korean market is still buzzing with potential.
The regulator has announced a series of measures that should support the industry's growth, but it is also set to introduce a number of prudential measures in 2015.
Amid limited opportunities in its domestic market, Mr Jong-Gyu Won, CEO of Korean Re, shares that the reinsurer is betting on international expansion to sustain its growth momentum. The company is also planning to enter the direct insurance space, a first for the reinsurer, and is considering setting up an underwriting agency in the Middle East.
On 22 April 2015, the Korean financial regulators announced their plan to reform audit and sanction procedures for the financial services industry (the "Reform Plan"). The Reform Plan aims to increase the compliance responsibility of insurance and other financial companies and to prevent unfair supervisory practices and imposition of inappropriate/excessive sanctions with the following key provisions.