South Korea's regulatory changes are strengthening capital quality, solvency resilience and consistency, under IFRS17 reporting.
As such, according to a report by AM Best, it is maintaining its stable outlook on South Korea’s non-life insurance segment, supported by enhanced regulatory frameworks and investment performance.
The introduction of the core capital K-ICS ratio, effective January 2027, is also expected to induce insurers to focus on improving fundamental capital with higher loss absorption features and prevent overreliance on supplementary capital securities.
In 2025, South Korea’s non-life industry experienced a decline in underwriting results, reflecting higher loss ratios in long-term and motor lines. Motor insurance profitability deteriorated due to the cumulative effect of premium rate cuts from prior years and ongoing claims-cost inflation.
Although a recent premium increase should provide support, the benefit will be recognised gradually through the earned premium base rather than immediately, the report noted.
“Although underwriting performance in South Korea’s non-life insurance segment weakened in 2025, investment income improved materially, supported by higher interest income, and in some cases, gains from asset disposals and valuation gains,” said AM Best Director of Analytics, Chanyoung Lee.
“AM Best expects investment performance to remain a stable source of profits over the next year, partly mitigating pressured underwriting profits.”