Market Entry
A road has been paved for Korean insurers to join Lloyd’s market, the world’s first insurance cooperative in London. This is because the Financial Supervisory Commission (FSC) has decided to abolish regulations such as allowing Korean insurers to provide security to their overseas affiliates.
Following Korean RE’s entry into the Lloyd’s market in April, Samsung Fire and Marine Insurance and Seoul Guarantee Insurance are expected to join the market as members. On Sept. 24, the FSC announced that it will improve the system after reviewing suggestions from financial companies.
The gist of the change is to permit Korean insurers to provide collateral to local banks in overseas countries when its affiliates open a letter of credit at the banks. The FSC has decided to revise the related laws. The Lloyd’s market membership requires insurers to provide collateral to their overseas affiliates.
The Lloyd’s market is the world’s first insurance cooperative with a 327-year-old tradition that plays the roles of the center of the global insurance market. Member firms under the Lloyd’s market number 94, and ranked 6th in the world in terms of insurance premiums in 2013. If an insurer becomes a member of the Lloyd’s market, the insurer can make good use of the Lloyd’s market’s credit and enhance its reputation, expanding their business areas.
The change in the system will promote Korean insurers’ entries into the market. At the moment, Korean RE is the only Korean member of the cooperative. Korean RE became a member after paying about 16 billion won (US$13.4 million) in sales funds.
Seoul Guarantee Insurance is also considering joining the Lloyd’s market. Samsung Fire and Marine Insurance joined the market in 1996, but left the market on the heels of the 2008 financial meltdown. But it is known that Samsung Fire and Marine Insurance is pushing forward with reentering the market.