Next year, the growth rate of South Korea's insurance industry is projected to fall below half of this year's level. Although insurance companies reported improved net profits in the first half of this year, concerns have been raised about the deteriorating profitability of their core operations, highlighting the urgent need for new growth drivers.
The Korea Insurance Research Institute forecasted at a seminar titled '2027 Insurance Industry Outlook and Challenges' held on October 22 at the Conrad Hotel in Yeouido, Seoul, that total insurance premiums will increase by 3.5% to 299 trillion won next year. This figure is less than half of this year's expected growth rate of 8.0% and marks a decline for the second consecutive year following last year's growth rate of 11.0%.
By sector, life insurance premiums are expected to rise by 2.3% to 142 trillion won, while non-life insurance premiums are projected to increase by 4.5% to 157 trillion won. However, it is anticipated that 89% of the increase in premiums next year will come from life insurance's protection products and long-term non-life insurance, indicating that growth in the insurance industry is concentrated in a limited number of products, with other segments failing to attract new demand.
Kim Dong-gyeom, head of the Financial Market Analysis Division at the Korea Insurance Research Institute, noted, "While net profits, contract margins (CSM), and solvency ratios (K-ICS) for life and non-life insurance sectors improved in the first half of this year, the increase in net profits was driven by investment gains rather than underwriting profits. Key indicators reflecting core operational competitiveness have deteriorated across both sectors."
Sales for life insurers have focused on non-guaranteed and guaranteed return products, while non-life insurers have concentrated on health and accident insurance. This reliance on face-to-face sales and corporate insurance agencies (GAs) has intensified competition over sales costs. Kim pointed out, "We are selling the same products through the same channels but at higher costs. Both sales and expenses have increased, yet profits have declined."
Insurance company CEOs also expressed skepticism about the business environment for next year. In a survey conducted earlier this month by the Korea Insurance Research Institute involving 29 insurance CEOs, the outlook for growth, profitability, and soundness in the insurance industry all fell below a neutral score of 3. The outlook for the soundness of the life insurance sector was the lowest at 2.31.
The Korea Insurance Research Institute recommended moving away from growth strategies reliant on expanding sales of existing products and urged the need to secure new revenue sources. This includes addressing the demand for retirement income security and health care due to an aging population, as well as expanding business areas to cover corporate risk.
Meanwhile, during the seminar, financial authorities expressed expectations that the introduction of a special investigative police (SIP) system would expand the scope of investigations into insurance fraud. Park Ji-sun, deputy governor of the Financial Supervisory Service, stated, "The likelihood of introducing the SIP next year is very high, and once the system is established, we hope to expand its reach into insurance fraud, allowing for closer collaboration between the Financial Supervisory Service and the police."
The Korea Insurance Research Institute forecasted at a seminar titled '2027 Insurance Industry Outlook and Challenges' held on October 22 at the Conrad Hotel in Yeouido, Seoul, that total insurance premiums will increase by 3.5% to 299 trillion won next year. This figure is less than half of this year's expected growth rate of 8.0% and marks a decline for the second consecutive year following last year's growth rate of 11.0%.
By sector, life insurance premiums are expected to rise by 2.3% to 142 trillion won, while non-life insurance premiums are projected to increase by 4.5% to 157 trillion won. However, it is anticipated that 89% of the increase in premiums next year will come from life insurance's protection products and long-term non-life insurance, indicating that growth in the insurance industry is concentrated in a limited number of products, with other segments failing to attract new demand.
Kim Dong-gyeom, head of the Financial Market Analysis Division at the Korea Insurance Research Institute, noted, "While net profits, contract margins (CSM), and solvency ratios (K-ICS) for life and non-life insurance sectors improved in the first half of this year, the increase in net profits was driven by investment gains rather than underwriting profits. Key indicators reflecting core operational competitiveness have deteriorated across both sectors."
Sales for life insurers have focused on non-guaranteed and guaranteed return products, while non-life insurers have concentrated on health and accident insurance. This reliance on face-to-face sales and corporate insurance agencies (GAs) has intensified competition over sales costs. Kim pointed out, "We are selling the same products through the same channels but at higher costs. Both sales and expenses have increased, yet profits have declined."
Insurance company CEOs also expressed skepticism about the business environment for next year. In a survey conducted earlier this month by the Korea Insurance Research Institute involving 29 insurance CEOs, the outlook for growth, profitability, and soundness in the insurance industry all fell below a neutral score of 3. The outlook for the soundness of the life insurance sector was the lowest at 2.31.
The Korea Insurance Research Institute recommended moving away from growth strategies reliant on expanding sales of existing products and urged the need to secure new revenue sources. This includes addressing the demand for retirement income security and health care due to an aging population, as well as expanding business areas to cover corporate risk.
Meanwhile, during the seminar, financial authorities expressed expectations that the introduction of a special investigative police (SIP) system would expand the scope of investigations into insurance fraud. Park Ji-sun, deputy governor of the Financial Supervisory Service, stated, "The likelihood of introducing the SIP next year is very high, and once the system is established, we hope to expand its reach into insurance fraud, allowing for closer collaboration between the Financial Supervisory Service and the police."
* This article has been translated by AI.
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