Next Year Insurance Companies' Premium Income Up 3.2%... 'With Corona' Face-to-Face Sales Environment Improvement

KIRI '2022 Insurance Industry Outlook and Challenges'
Life Insurance Growth Rate 1.7%... Non-life Insurance Increased by 4.9%

[Asia Economy Reporter Oh Hyung-gil] The growth rate of insurance companies' premium income is expected to be the lowest in the past four years next year. As the COVID-19 vaccination expands and the gradual return to normal life, the so-called 'with COVID' transition, the positive spillover effects that had benefited the insurance industry are expected to disappear. Instead, the face-to-face sales environment, a major sales channel for insurance, is expected to improve due to the easing of social distancing.

On the 8th, Kim Se-jung, Head of Trend Analysis at the Korea Insurance Research Institute, stated at the online seminar "2022 Insurance Industry Outlook and Challenges," "Improvement in growth conditions for the insurance industry is expected with economic normalization."

The premium income next year is expected to reach 240 trillion won, a 3.2% increase from this year (232.7 trillion won). The premium income growth rate had shown a favorable increase of 5.4% in 2019, 4.3% in 2020, and 4.9% in 2021 after a negative growth of 0.2% in 2018, but it is expected to slow down next year.

By sector, life insurance premium income is expected to increase by only 1.7% to 126.9 trillion won compared to the previous year, while non-life insurance premium income is expected to grow by 4.9% to 113.2 trillion won.

In life insurance, the first-year premium of general savings insurance is expected to increase by 16.4%, whereas the first-year premiums of protection insurance and variable savings insurance are expected to decrease by 2.8% and 8.7%, respectively.

In non-life insurance, the first-year premium of long-term accident and disease insurance is expected to increase by 6.4%, but savings insurance is expected to decrease by 21.6%. For automobile insurance, growth is expected to be limited to 2.1% due to a slowdown in the increase of registered vehicles and the expansion of online channels.

Kim said, "The easing of social distancing will improve the face-to-face channel sales environment, and the recovery of the real economy and rising interest rates will act as factors expanding demand for personal and corporate insurance. However, uncertainties remain regarding the end of COVID-19 due to the emergence of variants, and if the household debt issue leads to a hard landing, consumer sentiment may deteriorate."

Additionally, Kim Hae-sik, Research Coordination Director at the Korea Insurance Research Institute, suggested that "the insurance industry must overcome four major challenges next year: market innovation, strengthening core competencies, consumer trust, and ESG (Environmental, Social, and Governance) management."

He argued that through the 'one company, multiple licenses system,' insurance companies should be allowed to have multiple insurance subsidiaries, and that the use and integration of public data should be expanded to establish a digital ecosystem capable of platform operation and fair competition.

He also advised responding to the newly emerging risks of disasters and longevity, as well as the demand for health management and nursing services, and developing long-term investment capabilities that meet ESG standards.

He added, "Financial supervision should be innovated so that the market can judge the quality of insurance companies and products, and correspondingly, thorough information disclosure and sales responsibility should be strengthened. It is also necessary to promote measures to hold large corporate agencies (GA), which occupy most of the market sales, accountable to the same extent as insurance companies."

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