Big Tech and US Insurers Targeted... The 'Hot' Digital Property & Casualty Insurers

After the Launch of Carrot Insurance No.1
Kakao Life Insurance Plans to Enter the Market

[Asia Economy Reporter Oh Hyung-gil] Following Kakao Pay, LINA Life Insurance has also begun pushing for the establishment of a digital non-life insurance company. With the spread of non-face-to-face services, attention is being drawn to the potential success of digital-based non-life insurance, signaling fierce competition with existing non-life insurers.

According to the insurance industry, the Financial Services Commission held a regular meeting earlier this month and granted preliminary approval for Kakao Pay's non-life insurance company. This marks the first case of a platform-based big tech company entering the insurance business.

Kakao Pay plans to accelerate its business preparations aiming for full approval within the year. Reviewing the main points of the business plan submitted by Kakao Pay to financial authorities, it is expected to launch products such as club and mobile phone damage insurance, Kakao Kids-linked children's insurance, taxi safety, bike, and designated driver insurance linked with Kakao Mobility, and Kakao Commerce return insurance.

The primary customer base is the MZ generation (Millennials and Generation Z), starting with everyday life insurance and gradually expanding into areas familiar to the MZ generation, such as automobile insurance and long-term insurance. Leveraging the platform's strong influence, advantages include easy enrollment, simple claims, and prompt insurance payouts, enhancing consumer convenience.

In addition, LINA Life Insurance’s parent company, the U.S.-based Cigna Group, is also pushing to establish a digital non-life insurance company in Korea. At the end of last month, Cigna Group’s board of directors approved the plan to establish a digital non-life insurer in Korea.

Currently, Cigna Group is preparing to obtain approval for establishing a digital non-life insurance company through LINA Life Insurance.

They plan to apply for preliminary approval from financial authorities within the year, and it is expected that the digital non-life insurer will be operated alongside LINA Life Insurance, a life insurance company.

The insurance industry expresses concerns that entering the digital non-life insurance market may not be as smooth a path as expected.

Currently, Korea’s first digital non-life insurer is Carrot Insurance, a joint venture between Hanwha General Insurance, SK Telecom, and Hyundai Motor Company. The former The-K Non-Life Insurance declared its transition to a digital non-life insurer after becoming Hana Insurance.

Carrot Insurance’s flagship product, the per-mile auto insurance, has surpassed 200,000 subscribers and is gaining popularity, but it has continued to operate at a loss since its launch. Ultimately, to improve its financial structure, Carrot Insurance recently decided on a paid-in capital increase of 100 billion KRW.

Besides per-mile auto insurance, they have launched overseas travel insurance, pet insurance, leisure accident insurance, phone care insurance, driver insurance at 990 KRW monthly premium, and children’s insurance at 9,900 KRW, but these products lack differentiation from those already sold by other non-life insurers and have not led to remarkable results.

An industry insider said, "Consumer demand for everyday life insurance is still not very high," adding, "Given the advantage of being a digital platform, it could bring changes to the insurance market in the long term."

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