The initial premiums (first-time premium after getting insurance) for domestic life insurance companies are rapidly decreasing. On the other hand, insurance termination refunds and insurance loans hit the record high since 2003 when the data began to be collected.
Given the fact that insurance is the first thing people cancel when the economy slows down, these insurance indices suggest that the Korean economy has entered a downturn.
The Financial Supervisory Service (FSS) reported on September 2 that the initial premiums for 24 domestic life insurers in the first half of this year were 5.2 trillion won (US$4.3 billion), a 24.6% decrease from the same period of the previous year (6.99 trillion won, US$5.8 billion). Compared with the first half of 2016 (8.2 trillion won, US$6.8 billion) two years ago, it dropped 36%. The number of new insurance contracts in the first half of this year stood at 7,932,822, down by 130,000 from the first half of 2016 (8,063,615). Life insurers say that they have reduced sales of savings insurance gradually in preparation for the introduction of the new IFRS in 2021, but 20%-30% reduction in insurance premiums is a phenomenon that typically appears in recession."
The termination refunds of life insurance companies reached 12.9 trillion won (US$ 10.7 billion) in the first half of this year. If this trend continues until the end of the year, it is likely to exceed the previous record high of last year's reimbursement, which reached 22.1 trillion won (US$18.4 billion). Insurance experts say that many households abandoned their insurance policies as their financial situation deteriorated.