Korean non-life insurance market to see moderate growth, says Korean Re

The Korean non-life insurance market is expected to grow by 4.6% to KRW112.6trn in 2022, according to a report released by the Korea Insurance Research Institute. Korean Re said the report shows that overall premiums for the market are expected to grow 1.2% to KRW229.1trn in 2022, down from 2.1% in 2021, as a result of the life insurance market continuing to contract. Korean Re said non-life insurance growth will be moderating further amid weakening economic growth prospects, noting that since Russia’s invasion of Ukraine, the economy has been losing recovery momentum, as well as consumer spending likely to be affected by the latest uptick in new Covid-19 cases in July and August. “As economic strength will have a direct impact on insurance market growth, insurance companies will need to keep a weather eye on economic conditions such as inflation, GDP growth, household indebtedness and global supply chain issues,” said the reinsurer. General P&C insurance will remain a strong driver of growth, with premiums expected to grow by 6.8% in 2022, said Korean Re. It said solid growth momentum will come from the casualty lines of business, while the growth of fire, marine and surety insurance will slow down. Liability insurance will continue to boost the casualty market, which is expected to expand by 8.5%. Fire insurance premiums are anticipated to grow by 4.9%, while growth will be maintained for marine insurance thanks to increasing trade flows and shipbuilding orders. Korean Re also noted that there has been an increase in the number of cyberattacks. In Korea, the number of ransomware incidents soared by 76% year on year to 223 in 2021, following a surge of 225.6% in 2020. The amount of losses arising from global ransomware attacks is expected to climb to KRW312.7trn by 2031, from KRW23.6trn in 2021, according to estimates by the Korea Internet & Security Agency (KISA). The reinsurer said manufacturing is the sector most affected by ransomware in Korea. It accounted for the biggest share (32%) of the total ransomware incidents reported to KISA between January 2021 and November 2021. The information service industry made up 18%, followed by retail and wholesale (17%), and transportation (4%). The upward trend of cyber incidents has sparked interest in cyber risk management and cyber insurance among companies in Korea, according to the reinsurer. However, cyber risks other than third-party liability are not sufficiently covered by most cyber insurance policies issued by local insurance companies, it said. “Against this backdrop, several non-life insurers in Korea have recently started to offer comprehensive cyber insurance products that protect policyholders against a broader range of cyber risks, including costs of cyber incident investigation and data recovery, business interruption losses and ransom payments, as well as third-party liability,” Korean Re said. The cyber insurance market in Korea is still in its infancy, with the volume of the market estimated at KRW40bn. Given the size of economic losses related to cyber incidents, the market needs further development, said Korean Re. “The problem is, however, that this growing interest in cyber insurance does not necessarily result in an increase in availability of cyber insurance. On the demand side, that is because there is still a gap between general interest in cyber insurance and actual demand for insurance coverage against cyber risks. There seems to be low demand for comprehensive cyber cover that is more encompassing than the minimum compulsory coverage, partly because of cost. It will take more convincing for businesses to spend money on fully featured cyber insurance in addition to investing in data security improvement,” said Korean Re. It went on: “Another fundamental problem is that it is not easy for most companies to determine how much cyber insurance they need. It is for this reason that insurers need to consult closely with corporate risk managers in order to grasp their needs.” On the supply side, Korean Re pointed to a lack of historical data and the difficulty in quantifying and pricing cyber risks, as well loss accumulation for insurers. “Cyber insurance is a small but growing market segment, and the future growth of the market will hinge on how these challenges are addressed. The key to tackling the challenges is to balance the profitability of cyber insurance with ensuring the affordability and accessibility of cyber covers, which will absolutely be a tough task for the insurance industry,” said the reinsurer.

Korean non-life insurance market to see moderate growth, says Korean Re

Cyber insurance market in Korea growing but facing challenges

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