Head of Korea Insurance Research Institute: "Insurance Companies Focused on Size Competition, Neglecting Insurance Maintenance"

Warning for Insurance Industry Struggling to Find Sustainable Growth

"Financial Authorities Focus Only on Excessive Insurance Payments... Consumer Distrust Inevitable"

Plan to Conduct Research Seeking Improvements Such as Business Model Innovation

On the 4th, Ahn Cheol-kyung, President of the Korea Insurance Research Institute, warned that "the difficulties facing the insurance industry lie in maintaining the practices of the existing business model that drove past growth."

[Asia Economy Reporter Oh Hyung-gil] Ahn Cheol-kyung, President of the Korea Insurance Research Institute, warned on the 4th that "the difficulties facing the insurance industry lie in maintaining the practices of the existing business model that drove past growth."

He expressed his ambition to diligently fulfill the role of a think tank for the insurance industry to overcome these difficulties.

At a press conference held near Yeouido, Seoul, President Ahn stated, "To sum up the situation of the domestic insurance industry in one phrase, it can be described as 'it is difficult to find the warmth of sustainable growth,'" pointing out that "it is a situation of being surrounded on all sides in terms of profitability, growth, and capital."

He continued, "The profitability of insurance companies is weakening due to low interest rates, and even growth is slowing down," adding, "Until now, the impact of low interest rates on reserves was obscured by book value, but with the introduction of market valuation, pressure for capital injection into insurance companies is also increasing."

President Ahn recently criticized that the crisis in the insurance industry stemmed from competition for external growth of insurance companies.

He said, "Insurance companies focused on external growth and short-term goals rather than quality, increasing sales volume without properly reflecting risk in premiums," and "compared to sales, maintenance was relatively neglected, leading to widespread consumer distrust."

He also criticized, "The financial supervision practice that focused more on whether premiums were excessive than on the soundness of products also contributed," adding, "Product maintenance could not have been well managed, and consumer distrust was inevitable."

On the 4th, Ahn Cheol-kyung, President of the Korea Insurance Research Institute, warned that "the difficulties facing the insurance industry lie in maintaining the practices of the existing business model that drove past growth."

President Ahn announced that he will adopt "Rebuilding a Healthy Insurance Ecosystem" as this year's research slogan and will promote research to find business model innovation, market function enhancement, and practical improvement measures needed on the ground.

He said, "We plan to study the private insurance industry's response to new risks arising from environmental changes such as climate change and the novel coronavirus, digital innovation related to product and channel structure improvement, and moral hazard," adding, "We will review insurance company capital regulations and the deposit insurance system and strengthen research on consumer protection related to sales practices."

President Ahn added, "We plan to enhance global activities necessary to raise the status of the Korean insurance industry and the development of the Korea Insurance Research Institute," and "We will expand the institute's participation through overseas conferences, academic presentations, and discussions, and broaden the global scope by hosting global seminars and workshops."

This content was produced with the assistance of AI translation services.