South Korea’s non-life insurance market breaches $3b in net profits in 2021

Profits were boosted by improved underwriting performance.

South Korea’s non-life insurance market breached $3b in net profits in 2021 thanks to markedly improved underwriting performance, especially in the automobile insurance line, according to ratings firm AM Best.

AM Best said because of this it is maintaining a stable outlook on South Korea’s non-life insurance market.

“Although automobile claims are likely to rise in 2022 given the lifting of most COVID-19 restrictions, the larger premium base resulting from previous rate increases, as well as improving cost efficiency, will help the industry effectively manage its automobile profitability over the next 12 months,” said Chanyoung Lee, associate director, analytics at AM Best.

The industry registered a solid premium growth of 4% in 2021, with gross written premiums reaching $72.1b. The segment remains under pressure owing to elevated medical claims in the long-term insurance segment, driven by an increase in moral hazard and over-treatment by clinics and hospitals. However, the overall profitability of the long-term insurance line improved slightly, mainly because of a decline in the expense ratio due to subdued market competition.

Meanwhile, investment performance was largely stable in 2021. Despite a slight decline in investment yield, a continuously expanding asset base supported overall investment earnings, which increased by 4% from 2020.

AM Best said it expects South Korea’s non-life companies to see stable top-line expansion over the next 12 months, with growth supported by stable development in the long-term insurance line, driven by insurers’ continued efforts to increase sales of profitable health insurance and improve their persistency ratios.

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