The Korean insurance market saw premium income fall by 0.3% in 2018, from KRW202.31trn in 2017 to KRW201.78trn last year. According to Korean Re: “The market continued to face some headwinds in 2018, as a slowdown in the domestic economy weighed on insurance market growth.”
In its latest bulletin, Korean Re says that while the life insurance market remained in a slump, the non-life insurance market managed to maintain some growth momentum backed by long-term and general property and casualty (P&C) lines of business, and non-life premium income grew by 3.1% to KRW91.04ttn. Motor insurance premiums shrank, however, amid premium rate cuts and the growing popularity of low-cost online distribution channels, says the reinsurer.
Net income for insurers in Korea totalled KRW7.27trn for 2018, down 7.4% from the previous year. According to Korean Re, the contraction was driven by greater underwriting losses for the industry. Net income for non-life insurers fell by 17.8% to KRW3.24trn as increasing motor loss ratios drove up underwriting losses. Life insurers recorded a 3.1% growth in net income to more than KRW4.03trn, despite weaker underwriting results as their investment gains improved.
“Several social and regulatory headwinds have gathered pace to put downward pressure on both top-line and bottom-line growth, such as evolving demographics and upcoming changes in solvency regime, accounting standards and sales commission structure,” the bulletin states. “Insurers in Korea have been under strain to ensure their RBC ratios are maintained at a healthy level as the upcoming implementation of IFRS17 and a new RBC regime called K-ICS will burden their capitalisation.”