"COVID-19 Causes 1.5% Increase in This Year's Imported Insurance Premiums Compared to Last Year"

Korea Insurance Research Institute '2020 Revised Premium Income Forecast' Report
Life Insurance Down 1.8%, Non-life Insurance Up 5.2%

[Asia Economy Reporter Ki Ha-young] Due to the spread of the novel coronavirus infection (COVID-19), it is forecasted that the total gross written premiums of the insurance industry, excluding retirement pensions, will increase by 1.5% compared to last year.

The Korea Insurance Research Institute released the '2020 Revised Gross Written Premiums Forecast' report on the 9th. The institute projected this year's gross written premiums under the assumption that the spread of COVID-19 will increase uncertainty in the insurance industry's business environment, leading to weakened household insurance subscription capacity and a rise in lapse rates, which will intensify in the second half of the year.

According to the institute, the total gross written premiums of the insurance industry excluding retirement pensions are expected to increase by 1.5% year-on-year. Life insurance premiums are expected to decrease, while non-life insurance premiums are projected to increase.

For life insurance, a 1.8% decrease is anticipated compared to the previous year due to a slowdown in the growth of protection-type insurance and a continued decline in savings-type insurance. The decline is also expected to be larger than last year's (-1.4%).

Specifically, protection-type insurance is forecasted to grow by only 2.5% year-on-year due to deteriorating business conditions caused by COVID-19 and stagnation in the whole life insurance market. Ordinary savings-type insurance is expected to decrease by 4.9% year-on-year due to low interest rates and burdens from the introduction of new accounting standards (IFRS17) and the new solvency regime (K-ICS). Variable savings-type insurance is estimated to decline by 8.2% year-on-year due to increased financial market volatility caused by COVID-19.

On the other hand, non-life insurance is expected to grow by 5.2% year-on-year, centered on long-term non-life insurance and automobile insurance. This growth rate is higher than last year's (4.4%). Institutional factors such as automobile premium increases and the rise in mandatory liability insurance are analyzed to have an impact.

Long-term non-life insurance is expected to grow by 4.9% year-on-year, mainly driven by long-term accident and disease insurance and long-term driver insurance. The growth in automobile insurance is also steep, expected to increase by 8.9% year-on-year due to the effect of automobile premium hikes. Despite the economic slowdown caused by COVID-19, general non-life insurance is estimated to increase by 4.5% year-on-year due to growth in liability insurance. However, personal pensions are forecasted to decline by 7.2% year-on-year amid a lack of growth drivers.

Meanwhile, the 2020 gross written premiums for retirement pensions are expected to grow by 8.4% for life insurance and 5.5% for non-life insurance, driven by the expansion of the Individual Retirement Pension (IRP) market, increased external reserve ratios for DB-type pensions, and some companies' strategies to strengthen retirement pension capabilities.

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