Life Insurers Cry, Non-Life Insurers Smile... Insurance Research Institute Predicts Mixed Fortunes This Year Too

Insurance Premium Income Expected to Decrease 5.4% for Life Insurers and Increase 4.4% for Non-Life Insurers
"Widening Gap Among Insurers... Conservative Management Strategies Needed"

The Korea Insurance Research Institute forecasted that the performance of life insurance companies and non-life insurance companies will diverge again this year. While the premium income of life insurance companies is expected to decrease by more than 5% compared to the previous year, the premium income of non-life insurance companies is anticipated to grow by more than 4% during the same period.

On the 13th, the Korea Insurance Research Institute published the "2023 Revised Insurance Industry Outlook" report containing these details. The report predicted that amid significant economic uncertainty this year, the growth of the insurance industry will slow down. Accordingly, it forecasted that the performance gap between insurance companies will widen.

This year, the total insurance industry premium income (gross written premiums) is expected to decrease by 0.7% compared to the previous year due to base effects and other factors. Among these, life insurance is projected to record premium income of 125.5 trillion KRW, down 5.4% from the previous year. This decline is attributed largely to base effects and the poor performance of investment-type products. In fact, last year, life insurers’ premium income increased by 11.6% year-on-year to 132.7 trillion KRW, driven by the expansion of single-premium savings insurance. Due to the base effect from last year and the sluggishness of variable savings insurance, premium income is expected to decrease this year.

On the other hand, non-life insurance companies are expected to continue their growth trend. This year, gross written premiums are forecasted to reach 125.4 trillion KRW, a 4.4% increase from the previous year. Considering that non-life insurers also experienced a base effect last year with premium income growing 11.5% year-on-year to 120.1 trillion KRW, driven by the growth of retirement pensions, the contrast in fortunes is even more pronounced. This year, general non-life insurance products such as long-term casualty insurance with increased accident and driver insurance, liability insurance, comprehensive insurance, and other special insurance lines are expected to grow.

Jo Young-hyun, head of the Financial Market Analysis Division at the Korea Insurance Research Institute, explained, "Recently, there has been a tendency for the gap in growth, profitability, and soundness among insurance companies to widen. This trend is expected to continue due to ongoing economic and financial uncertainties, intensified sales competition, and changes in accounting standards." He added, "Insurance companies need to establish management strategies from a conservative perspective, considering that under the new accounting standards, performance has become more sensitive to economic and financial variables amid high economic uncertainty."

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