South Korea's financial regulators are calling on insurers and banks to play a bigger role in long-term investment as the government seeks to unlock capital for "productive finance" and support strategic sectors including infrastructure and energy transition projects.
At a 16 April meeting led by Financial Services Commission chairman Lee Eog-weon, banking and insurance stakeholders discussed reforms aimed at strengthening capital capacity in the financial sector.
A key focus of the meeting was capital regulations and requirements for banks and insurers. The move is expected to release up to KRW98.7tn ($71.6bn) in additional investment capacity, with KRW74.5tn for banks and KRW24.2tn for insurers.
The reforms are expected to expand room for insurers to invest in long-term assets, including national infrastructure and energy transition projects, marking a shift away from more traditional conservative asset allocation strategies.
The regulator also urged insurers to increasingly channel their freed-up capital into future growth- and export-oriented sectors, while also supporting microenterprises and small and medium-sized enterprises (SMEs) facing pressure from higher costs linked to geopolitical instability.
The FSC also highlighted the insurance industry’s role in ongoing financial support measures tied to the Middle East conflict. As of 7 April, the financial sector had provided over KRW13tn in assistance, including KRW7.2tn in maturity extensions and payment deferments.
Within insurance, companies have rolled out targeted relief initiatives such as premium reductions on children’s health insurance and delivery rider policies. The wider non-bank financial sector has also introduced cashback schemes for fuel purchases and payment deferments for truck drivers, with further measures, including potential cuts to auto insurance premiums, under review.
Insurers, according to the FSC, should direct their expanded capital capacity toward productive investment rather than leaving it idle. Regulators said they will closely monitor how insurers deploy the newly freed capital and continue refining capital rules to support the transition toward higher-impact investment.