Entry Barrier to Be Lowered

The South Korean government has decided to lower reinsurance market entry barriers for more competition.

The current Insurance Business Act regards reinsurance as a part of non-life insurance. As such, the same regulations are applied to both despite the fact that reinsurance is different from car insurance and the like in that the former is not for individuals but for insurance companies.

In other words, relatively excessive regulations for consumer protection have been applied to reinsurance in spite of the fact that it is used by those well aware of insurance. This is why there have been calls for system improvement. The government is planning to separate reinsurance from non-life insurance as an individual sector in the insurance industry in this regard. Details are scheduled to be discussed with reinsurance companies, industry associations, etc.

At present, every licensed non-life insurance company can do reinsurance business without any request for approval. However, the request and approval are likely to become mandatory once the separation is completed. In addition, the sector is predicted to be classified in more detail. Specifically, it is likely to be divided into life reinsurance, non-life reinsurance and third-party reinsurance with the minimum capital requirement for approval lowered from 30 billion won to 10 billion won.


 

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