Korean Re Became the First Reinsurer to Receive a Patent for its Financial Evaluation Model
In October 2022, Korean Re obtained patent protection for its financial evaluation model, the first of its kind in the insurance industry. The model is a system that enables life insurers to grade the financial conditions of the insured, such as earnings and occupation, in order to calculate the sum insured of a life policy. Life insurers have been under pressure from financial authorities to set out criteria for evaluating the financial ability of the insured amid a growing number of insurance scams involving large death benefits. In response to the demand of the life insurance industry regarding the financial evaluation, Korean Re successfully completed a year-long project to develop its own model customized to the needs of local life insurers in 2020.
The financial evaluation model has been designed to apply a wide range of rules depending on the importance of input data and reflect the future value of assets and incomes so as to generate reasonable and objective outcomes. It is also easy for anyone to use because only a set of simple information is required to be entered.
No other reinsurer in the world has developed a client support system that is capable of calculating the sum insured based on the financial data of the insured. Korean Re applied for a patent in July 2020 to protect its rights and gain credibility regarding the technical solution it had developed. After a lengthy examination, the patent was granted to Korean Re on October 20, 2022.
“As life insurers were struggling to establish financial evaluation criteria due to a lack of necessary data, we were motivated to support our embattled clients. Our model is capable of producing meaningful information because it is designed to evaluate both quantitative and qualitative information as opposed to the traditional method of using quantitative data only such as personal income levels and corporate financial statements” said Hye-Yun Ahn, Head of Domestic Underwriting Support and Woo-Jo Kim, Chief Underwriter of Domestic Underwriting Support from Domestic Life & Health Team at Korean Re, who have been responsible for the design and development of the model. Building on the recent achievement that has demonstrated our technical competitiveness, we will continue to strive to provide clients with services in a way that meets their needs going forward.