'Big 4' in Non-Life Insurance Chase... Meritz Fire & Marine Surpasses the 'Cursed 10%' Market Share (Comprehensive)

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[Asia Economy Reporter Oh Hyung-gil] 'Can Kim Yong-beom's Meritz Fire & Marine Insurance surpass the big four in the non-life insurance industry?'

In the non-life insurance industry, which is experiencing sluggish business conditions, Meritz Fire & Marine Insurance, which has been continuing its "solo growth," surpassed a 10% market share last year. A 10% market share has been considered a "magical barrier" for Meritz Fire & Marine Insurance. Accordingly, there are expectations that a major shake-up in the rankings of non-life insurers originating from Meritz could occur. However, some voices raise doubts about sustainable growth due to a focus on performance and excessive commission policies.

According to the non-life insurance industry on the 24th, Meritz Fire & Marine Insurance recorded a gross written premium of 8.0323 trillion won last year based on preliminary closing. This is a 13.4% increase from 7.08 trillion won the previous year. Based on the total gross written premiums of 13 non-life insurers, Meritz achieved a market share of 10.1%.

This is the first time since 1998, when market shares could be checked through electronic disclosure, that Meritz Fire & Marine Insurance's market share has exceeded 10%. Meritz Fire & Marine Insurance traces its roots back to 'Joseon Fire & Marine Insurance,' the first insurance company established in 1922, but since becoming Meritz Fire & Marine Insurance in 2005, its market share had remained in the 8% range until recently.

Meritz Fire & Marine Insurance's growth has been outstanding over the past five years. Its market share was 7.9% in 2015, increased to 8.1% in 2016, 8.5% in 2017, and reached 9.2% in 2018. The increase in market share steadily rose from 0.2 percentage points to 0.4, 0.7, and 0.9 percentage points.

It is also closely chasing the big four non-life insurers. Samsung Fire & Marine Insurance holds a dominant position with a 23.7% market share last year. Hyundai Marine & Fire Insurance follows with 16.8%, DB Insurance with 16.3%, and KB Insurance is estimated to have 12.9%. Although there is still a gap of over 2% with KB Insurance, some forecasts suggest that Meritz could surpass it soon if the current growth pace continues.

The increase in Meritz Fire & Marine Insurance's market share, which had been "perennially fifth," is analyzed to be based on Vice Chairman Kim Yong-beom's product strategy focused on long-term insurance and a sales reinforcement strategy through securing agents.

Last year, Meritz Fire & Marine Insurance's gross written premiums for long-term insurance surged 18.4% year-on-year to 6.8671 trillion won, while its automobile insurance gross written premiums decreased by 16.6% to 651.3 billion won. This is seen as a successful shift from automobile insurance, which has soaring loss ratios, to life insurance. Additionally, Meritz secured exclusive agents, establishing a solid sales channel. As of October last year, Meritz had 23,278 exclusive agents, an increase of about 7,000 from 16,360 at the end of the previous year.

Some in the industry criticize Meritz Fire & Marine Insurance for disrupting market order by setting excessive commissions and warn that sustainable growth may be difficult due to the sale of high-quality bonds. The Financial Supervisory Service pointed out during Meritz's comprehensive inspection last year that business expenses and long-term insurance sales were rapidly increasing simultaneously and urged the company to establish a management department and management plan capable of controlling business expense execution.

Researcher Kang Seung-geon of Hi Investment & Securities believes that although Meritz defended its performance by selling assets, a high loss ratio suggests expected poor performance. He pointed out that Meritz offset deteriorated insurance profits with large-scale disposal gains to protect net income, but fundamentally, the risk loss ratio remains high. He explained, "Since the second half of 2017, Meritz's growth strategy has increased the growth rate of risk premiums, and considering the fourth-quarter risk loss ratio of 103.5%, it means that growth is not translating into profits."

Researcher Jang Hyo-seon of Samsung Securities also forecasted, "Considering the limited increase in actual loss rates below 10% at the beginning of the year and the base effect of one-time gains from investment and business sales last year, a decline in profits this year is inevitable."

An industry insider said, "It is quite significant that Meritz Fire & Marine Insurance has brought change to the non-life insurance industry, which has been entrenched for decades," but added, "It is now Meritz's responsibility to dispel doubts about its growth in the market."

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