How South Korea insurers ended a 4-year low of direct written premiums

Insurers registered a 4.1% growth in 2020 for the first time since 2016.

The direct written premiums for the top 10 insurers in the South Korean life insurance industry grew by 4.1% in 2020 after declining at a compound annual growth rate of 3.3% during 2015-2019, according to findings by data and analytics company GlobalData.

GlobalData’s Senior Insurance Analyst Swarup Kumar Sahoo, said that a drop in market interest rate and aggressive marketing of savings-type products by insurers helped in reviving the demand for life insurance products in 2020.

Additionally, term life, which accounted for 46% of the life insurance segment in 2020, grew by 4.2% as compared to the previous year. Endowment, which accounted for a 36% share of the life insurance segment in 2020 also registered 9.8% growth.

GlobalData’s findings also revealed that South Korean life insurers also benefited from the postponement in implementation of IFRS17 regulation to 2023. The regulation, which was earlier expected to be implemented in 2021, mandates insurers to set aside additional capital to sell savings-type products. Insurers were compelled to limit sales of such products prior to 2020. However, due to the change, they have continued with sales of endowment products to meet the increasing demand for savings products.

However, despite witnessing premium growth, the combined market share of the top 10 life insurers declined from 78.1% in 2019 to 77.6% in 2020, due to aggressive marketing by smaller insurers. 

For instance, South Korea’s leading life insurer, Samsung Life, saw its premium increase by 3.7% in 2020. However, its market share decreased from 22.1% in 2019 to 21.9% in 2020.

“Savings-type insurance products are expected to remain competitive against bank deposits and savings products due to declining interest rates. Revival in the country’s economy, the declining unemployment rate as well as the increased pace of vaccination will support the growth in South Korea’s life insurance industry over the next couple of years,” Sahoo said.

GlobalData’s Insurance Intelligence Centre reveals that seven of the top 10 insurers in South Korea registered growth in 2020 against a decline in 2019. SK Life Insurance, the sixth-largest life insurer in the country, registered the highest growth among the top 10 insurers with 24.3% growth in 2020.

The ranking of the top five insurers has not changed in South Korea with Samsung Life and Hanwha Life being the top two insurers. Kyobo Life, the third-largest life insurer, increased its market share from 10.7% in 2019 to 11.4% in 2020.