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제목 Insurance Market Outlook Update for 2018

The Korean insurance market is expected to contract further in 2018 amid slowing economic growth and decreasing sales of savings insurance. Following a 1 percent decline in 2017, premium income is projected to decrease by 1.9 percent year on year to KRW 198.5 trillion in 2018. Both the non-life and life markets are slowing down, with a mature life sector particularly weighing on overall premium growth.

 

<Trends of Korean Insurance Market Growth >

(Source: Korea Insurance Research Institute)

 

The contraction of the life insurance market is deepening due to weakening sales of both protection and savings policies. Life premiums are expected to decline by 5.7 percent to KRW 107.5 trillion in 2018, reflecting a sharp decrease in general savings premiums. Despite rises in credited interest rates, life insurers remain less compelled to sell savings policies as IFRS 17 requires them to separate distinct investment components from the host insurance contract and to exclude those investment components from their insurance revenues. Reduced tax benefits on savings insurance also make it less attractive to consumers.

 

The growth of protection policies is slowing down due to slackening demand for whole life insurance. Premium income from protection policies is projected to increase by 1.4 percent in 2018 as life insurance companies are seeking to sell more protection products such as long-term healthcare and critical illness policies, instead of savings products. Given the maturity of the whole life market, however, they would hardly expect a rapid growth in premium income. The government's plan to expand national healthcare insurance coverage may reduce demand for protection products offered by private insurers. On the other hand, increasing life expectancy may create demand for new types of life and health insurance products such as insurance plans that reward the insured for improving their health.

 

The retirement annuity market continues to grow with more baby boomers retiring, but life insurers will likely experience only a limited growth in their retirement annuity business due to increased competition among annuity providers from different financial industries. Their premium income from retirement annuities is expected to grow by 2.7 percent this year.

 

<Life Insurance Market Growth Trends by Line of Business >

*Individual figures may not add up to the total shown due to rounding. (Source: Korea Insurance Research Institute)

 

Non-life premiums are projected to grow by 3.0 percent to KRW 91 trillion in 2018. By line of business, general property and casualty (P&C) insurance is expected to grow by 7.2 percent, backed by guarantee, liability and accident lines of business. The motor insurance market keeps slowing down due to the expansion of lower-priced online motor insurance and a decrease in the number of car registrations. Intensifying price competition among insurers is also affecting premium growth negatively.

 

Non-life insurers are also suffering a fall in savings insurance premiums, causing their long-term lines of business to slow down. The decline is being driven by stagnant household income growth, reduced tax incentives for savings insurance and strengthened solvency regulations on insurers. However, steady demand for long-term accident and disease coverage is expected to bolster the overall market, with long-term insurance premiums forecast to grow by 2.3 percent in 2018.

 

The expansion of mandatory insurance such as disaster liability insurance is also driving the growth of the general P&C insurance market. However, a decrease in government budget for social infrastructure development may adversely affect construction investment, leading to a drop in surety bond premiums. A contraction in non-life savings insurance and annuity plans is set to continue into 2018 due to stagnant household income growth and reduced tax benefits for those products.

 

<Non-Life Insurance Market Growth Trends by Line of Business >

(Source: Korea Insurance Research Institute)

 

 

 
 
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