Korea Insurance Research Institute: "Innovation Needed from Companies and Government for Sustainable Growth"

'Post-Corona Era Insurance Industry Grand Debate' Seminar

[Asia Economy Reporter Ki Ha-young] To ensure the sustainable growth of the insurance industry in the post-COVID era, it was advised that the government and financial authorities establish systems through innovation, and companies pioneer the market.

Professor Kim Heon-su of Soonchunhyang University stated this on the 5th during the 'Post-COVID Era Insurance Industry Grand Debate' seminar held online by the Korea Insurance Research Institute, under the theme 'Is the Insurance Industry Sustainable?'.

Professor Kim diagnosed, "The insurance industry, which has entered the digital era due to the impact of COVID-19, is facing threats to its sustainability when evaluating the economy, population, risk perception, consumer trust, and regulations." To overcome this crisis, he presented eight major innovation tasks for corporate efficiency and government regulation.

First, it was pointed out that various business opportunities must be provided to respond to the diverse needs of digital consumers and maximize corporate efficiency. He emphasized the need to shift from the positive licensing system, which lists insurance business permits by category, to a negative licensing system, and to innovate licensing regulations to include IT tasks such as non-medical health services, digital-related big data, and artificial intelligence (AI).

He also advised that strict principles should be applied to government price controls, but control over product development should be minimized. Professor Kim explained, "Insurance premium regulation should only be implemented when strict criteria such as price collusion or severe information asymmetry are met," adding, "Unnecessary product regulations should be eliminated through the negative licensing system, and since product development risks are the responsibility of companies, regulatory innovation is needed to strengthen insurance companies' capital and induce self-liability adjustments."

Regarding consumer trust, he proposed regulatory innovation related to terms and conditions, solicitation, and disclosure for consumers who value product comparison, transaction speed, and feedback. Professor Kim emphasized, "Average consumers must easily understand everything from purchasing insurance to receiving claims to build trust," and added, "While continuing strict consumer protection supervision based on the Financial Consumer Protection Act, consumer education should be sustained to enable decision-making based on the principle of self-responsibility."

He also advised developing healthcare services and Korean-style tontine pensions needed for future generations in relation to new product introduction, and further reviewing the introduction of Employment Savings Accounts (ESA). He said, "A Korean-style tontine pension that can offer competitive premiums should be developed to secure retirement income," and "Moreover, a layered employment safety net should be established with a first stage employment insurance and a second stage private employment pension (ESA) to reduce moral hazard while encompassing self-employed individuals in safety net blind spots."

Along with this, Professor Kim emphasized the need to increase the overseas market share, which accounts for only 2% of domestic insurance companies' premiums, and to pursue digital innovation to communicate with the MZ generation, known as the digital generation.

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