Digital Insurers' Performance Disappointing... Limitations of Non-Face-to-Face Channels?

Kyobo Life's Seventh Year of Deficit
Carrot Insurance Also Faces 9 Billion Won Loss
Uncertain Success in Turning Profitable

[Asia Economy Reporter Oh Hyung-gil] Kyobo Lifeplanet and Carrot General Insurance, digital insurers that sell insurance online without agents, both posted poor results last year. Kyobo Lifeplanet, in its seventh year, has not been able to break its streak of consecutive losses. Despite expanding its organization and sales network, Carrot General Insurance faces concerns that it may fall into the same trap of limitations inherent in non-face-to-face channels.

According to the insurance industry on the 26th, Kyobo Life recorded a net loss of 15 billion KRW last year, remaining in the red for the seventh consecutive year since its establishment in 2013.

After recording a net loss of 5 billion KRW in its first year of establishment in 2013, it posted net losses of 16.7 billion KRW in 2014 and 21.2 billion KRW in 2015. Following losses of 17.5 billion KRW and 18.7 billion KRW in 2016 and 2017 respectively, it slipped back to a loss of 16.8 billion KRW in 2018. At least last year, it improved its deficit by 1.8 billion KRW (10.7%) compared to the previous year.

Sales revenue (insurance operating income) is on the rise. Kyobo Life’s insurance operating income increased from 56.5 billion KRW in 2017 to 113.7 billion KRW a year later, and further grew to 154.7 billion KRW last year. This represents nearly a threefold growth in three years. Industry experts say that Kyobo Lifeplanet is only now beginning to find its footing in the insurance market, but given the recently worsened industry conditions, it remains to be seen.

Carrot General Insurance also recorded a net loss of 9 billion KRW last year. Since it received preliminary approval in January and final approval in October last year, it is too early to discuss profitability, but whether it can achieve an early turnaround to profitability is uncertain. Both Kyobo Life and Carrot General Insurance require customers and the company to conduct all transactions?including insurance subscription, maintenance, and claims payment?directly through the internet without branches or insurance agents.

Although procedures have been simplified so that anyone can easily handle related tasks on the homepage, the prevailing assessment is that consumers still find it difficult to access these services. Considering that insurance is a product chosen conservatively to prepare for future risks, the advantage of non-face-to-face sales is difficult to leverage in reality.

Recently, non-face-to-face sales have gained attention due to the COVID-19 pandemic, but the merit of simply emphasizing easy subscription procedures is also pointed out as a limitation.

An insurance industry official said, "Digital insurers emphasize easy subscription and low premiums, but it is not easy to differentiate themselves from existing insurers who have already secured a significant customer base," adding, "They need to compete with innovative products based on digital technology."

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