Next Year's Imported Insurance Premium Growth Rate 1.7%... "Return to Low Growth, Need Structural Improvement"

Slower Growth Expected in Premium Income
1.7% Growth Excluding Retirement Pensions
Impact of Decline in Savings and Auto Insurance

[Asia Economy Reporter Ki Ha-young] Starting next year, the growth rate of the insurance industry's gross written premiums is expected to slow down. After a temporary high growth this year, it is predicted to return to a low growth trend.

On the 16th, the Korea Insurance Research Institute held an online seminar titled "2021 Insurance Industry Outlook and Challenges" and made this diagnosis. Excluding retirement pensions, the insurance industry's gross written premiums next year are forecasted to grow by only 1.7% compared to this year. The recent temporary rebound trend due to strong sales of short-term savings insurance and expansion of automobile insurance has slowed down.

In the case of life insurance, it is expected to decrease by 0.4% compared to the previous year due to the slowdown in growth of protection-type insurance and contraction of savings-type insurance. This follows a 2.5% increase this year, returning to negative growth. By category, protection-type insurance is predicted to grow by only 2.9% year-on-year due to deteriorating consumer sentiment, delayed improvement in face-to-face channel sales environment, and strengthened sales regulations. During the same period, general savings insurance and variable savings insurance are expected to decrease by 2.6% and 6.0%, respectively.

The Korea Insurance Research Institute forecasted that the growth rate of gross written premiums for non-life insurance, excluding retirement pensions, will slightly slow from 6.1% this year to 4.0% next year. This is due to sluggish savings insurance and a slowdown in automobile insurance growth. By category, long-term non-life insurance is expected to grow by 4.7% year-on-year, centered on accident, illness, and driver insurance. Automobile insurance is projected to grow by 2.9%, as the effects of automobile premium increases and reductions in individual consumption tax on passenger cars have disappeared, while factors such as expanded sales through online channels have contributed to a decrease.

The Korea Insurance Research Institute advised that it is necessary to lower growth expectations and improve the industry's structure for a rebound. The traditional business model of the insurance industry shows limits to growth, but the transition to new business models is not proceeding smoothly. In personal insurance, demand is decreasing due to a decline in the main demand group, the younger population, and in corporate insurance, demand contraction is inevitable due to the continued structural low growth of the economy. From the sales channel perspective, the spread of non-face-to-face culture requires a review of the traditional sales channel structure, but the introduction of new business models such as health management services, digital insurance, and online channel innovation to replace these is delayed.

The institute pointed out the need to respond to digital transformation through business restructuring and competition-cooperation. It suggested introducing run-off, in addition to financial reinsurance, to provide insurance companies with various options for voluntary restructuring. It also emphasized the need to strengthen the insurance industry's inherent risk selection capabilities by utilizing media data and other data beyond traditional insurance data. It diagnosed that creating diverse industrial ecosystems through public-private cooperation in fair competition on online platforms, healthcare participation, and long-term investment in green infrastructure, and enhancing industrial efficiency through competition are also necessary.

President Ahn Cheol-kyung of the Korea Insurance Research Institute said, "Since the economic and financial environment next year is expected to be a difficult period for everyone, growth expectations should be lowered and this should be used as an opportunity for structural improvement for sustainability," adding, "The business model should be adjusted to improve profitability and enhance sustainability, and innovation through competition, cooperation, and partnerships in the digital ecosystem should be pursued."

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