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Subject Korean Commercial Insurance Market Update

Korean Commercial Insurance Market Update 

The growth of premium income for the commercial insurance market in Korea accelerated to 14.1% in 2021, with the market being valued at KRW 4,664.1 billion. All lines of commercial insurance showed strong growth except for fire insurance. In particular, liability, engineering, and comprehensive insurance recorded double-digit growth rates. Engineering insurance recorded the highest year-on-year growth rate of 22.3%, with premiums amounting to KRW 365.4 billion in 2021. The number of new commercial insurance policies increased by 9.4% to almost 5.8 million in 2021, with marine insurance posting the highest growth rate of 24.5%.  

Commercial insurance refers to general property & casualty (P&C) insurance other than household general P&C insurance and motor insurance. It is designed to provide coverage for businesses against risks that may arise in relation to their business operations and threaten their financial stability. Unlike personal lines of insurance, commercial insurance is corporate insurance that is structured and negotiated to meet the needs of specific corporations or industries. It provides much higher limits of coverage than personal insurance because the sum insured is typically much higher.


 

In 2021, commercial insurance accounted for 43.3% of the total general P&C insurance premiums, and the share has continuously increased from 41.2% in 2019 to 43.3% in 2021. On the other hand, personal insurance made up the rest 56.7% in 2021, down from 58.8% in 2019. When it comes to new policy counts, commercial insurance took up only 18.5%, but the share has also been on the rise.

(Units: No. of policies, KRW million)

 

2019

2020

2021

2021 Growth Rate (%)

Fire

New Policy Count

328,532

355,484

366,298

3.0

Premium

(KRW)

206,036

204,740

208,759

2.0

Marine

New Policy Count

3,019,132

2,836,877

3,531,940

24.5

Premium

(KRW)

597,614

699,833

742,090

6.0

Engineering

New Policy Count

21,914

17,882

19,509

9.1

Premium

(KRW)

268,886

298,704

365,398

22.3

Liability

New Policy Count

1,590,607

1,797,175

1,563,601

-13.0

Premium

(KRW)

1,086,504

1,212,367

1,347,045

11.1

Comprehensive

New Policy Count

260,148

274,917

300,137

9.2

Premium

(KRW)

1,506,944

1,671,344

2,000,825

19.7

Total

New Policy Count

5,220,333

5,282,335

5,781,485

9.4

Premium

(KRW)

3,665,984

4,086,988

4,664,117

14.1

*Individual figures may not add up to the total shown due to rounding.

(Source: Korea Insurance Development Institute, Sep 2022)

 

There are five major lines of corporate insurance business: fire, marine, engineering, liability and comprehensive insurance. In 2021, comprehensive insurance premiums grew by 19.7% to KRW 2,000.8 billion. Comprehensive insurance took up the largest portion of the market, accounting for 42.9% of the total premium income, followed by liability (28.9%), marine (15.9%), engineering (7.8%), and fire (4.5%).

 

 

The share of fire insurance continued to drop to 4.5%, with the fire coverage being increasingly packaged into comprehensive insurance. Marine insurance also saw its share fall to 15.9% in 2021 from 17.1% in 2020 as its premium growth slowed down compared to the previous year. The share of liability insurance declined marginally but remained high at 28.9% amid the growing importance of liability coverage among companies and the government’s initiatives to introduce new compulsory insurance plans to reinforce protection of accident victims against the costs of recovering from an accident that someone else has caused. In particular, there has been an uptick in demand recently due to increasing incidences of man-made disasters and growing interest in insurance covering the commercial sector against various business risks, such as negligence claims and data breaches.

The incurred loss ratio of commercial insurance significantly improved to 60.1% in 2021 from 95.7% in 2020 due to a decrease in large losses. All lines of insurance saw their loss ratios decline, with comprehensive, marine, and fire enjoying sharpest reductions in loss ratios. By line of business, comprehensive insurance recorded the highest loss ratio of 72.9%, followed by liability at 70.5%, fire at 43.0%, engineering at 33.3%, and marine at 25.1%.