One after Another
Global non-life insurers have been entering the Korean market one after another. The Korean insurance market ranks seventh or eighth in the world.
Star International Insurance Singapore is expected to target the Korean travel insurance and accident insurance markets beginning from 2024 if it receives a license for a Korean branch in the second half of 2023, according to industry sources on May 17. Among foreign insurers in Korea, AIG and Ace Insurance are targeting these markets already.
Foreign insurers account for less than 2.5 percent of the Korean non-life market, while posting a net profit of 200 billion won (US$150 million). This is because individual consumer insurance products have a large share of the Korean non-life insurance market and the Korean non-life insurance market is dominated by Korean companies. In particular, with the introduction of a new accounting system (IFRS17) in Korea this year, Korean insurers’ earnings have surged and their stock prices have been on the uptick every day. Foreign insurers can hardly expand their shares of the Korean markets of medical indemnity insurance, long-term insurance such as health and accident insurance, and automobile insurance.
Korean non-life insurers are closely monitoring changes in the corporate insurance (general insurance) market. The Korean corporate insurance market is dominated by the so-called big four insurers (Samsung Fire & Marine, Hyundai Marine, DB Insurance, and KB Insurance), but foreign insurers have shown increasing interest in the past two to three years. This is due to the enforcement of the Major Disaster Punishment Act in Korea since 2022, as well as a series of data center fires that fueled demand for insurance among Korean companies.
In fact, Factory Mutual Insurance Company (FM Global), one of the world’s largest property insurers, received a permit from the Financial Services Commission last year and began its business operations in Korea this year. Property insurance is a product that covers the cost of property restoration and business losses such as losses from the suspension of sales activities when companies suffer damage from natural disasters or fires.
However, opinions are mixed on whether foreign non-life insurers will be able to successfully establish themselves in the Korean market, as foreign insurers have mainly focused on the Korean life insurance market and with five foreign insurers having left Korea in the last decade.