Performance celebrations were held by non-life insurers... but win-win finance is only by life insurers

Non-life Insurers' H1 Net Profit Hits 4.6 Trillion Won, Up Over 1 Trillion Won YoY
Record High Even Considering IFRS17 Illusion Effect
Auto Insurance Also Steady... Profit Forecast Positive This Year
Meanwhile, Win-Win Financial Plan Proposed Only by Life Insurers

As banks and card companies in the financial sector continue to propose win-win financial plans, voices are growing that the insurance industry also needs to actively participate. While non-life insurance companies, which have been posting record-breaking profits rivaling those of banks, remain quiet, only life insurance companies with slower profit growth have presented win-win financial plans.

According to the industry on the 23rd, large life insurance companies such as Kyobo Life Insurance are reviewing plans to establish win-win financial measures. Following Hanwha Life Insurance's industry-first win-win financial plan last month, there is speculation that the second mover could also be a life insurer. Hanwha Life launched the '2030 Lump Sum Savings Stepping Stone Insurance' on the 21st, which it announced last month. This product offers a fixed interest rate of 5% per annum over five years to the 20s and 30s generation who are considering marriage, childbirth, and economic independence.

On the other hand, non-life insurers, which are enjoying a profit bonanza, have been quiet about win-win financial plans. In the first half of this year, non-life insurers earned about 4.6 trillion won in net profit, significantly surpassing the 3.4 trillion won net profit of life insurers. This is an increase of over 1 trillion won compared to the 3.4337 trillion won net profit in the first half of last year. Even considering the accounting illusion effect from the adoption of the new accounting standard IFRS17, this is regarded as a record-breaking performance.

Regarding the new profitability indicator introduced under IFRS17, the Contractual Service Margin (CSM), Samsung Fire & Marine Insurance even surpassed Samsung Life Insurance, the 'eldest brother' in the insurance industry. As of the end of the first half, Samsung Fire's CSM stood at 12.6549 trillion won, increasing by 453.5 billion won this year. It outpaced Samsung Life's CSM of 11.9 trillion won by nearly 700 billion won. CSM is a concept that evaluates future profits from insurance contracts; it is recognized as a liability at the contract inception and amortized as profit over the contract period.

Auto insurance, which had been in perennial deficit, has maintained a stable level since the COVID-19 pandemic. According to the industry, the average auto insurance loss ratio (the ratio of claims paid to premiums received) of major large non-life insurers such as Samsung Fire, DB Insurance, Meritz Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and KB Insurance from January to July this year was 77.2%. Generally, the industry considers an auto insurance loss ratio below 80% as a level where insurers do not incur losses.

Even last month, when flooding damage occurred due to heavy rain and typhoons, the loss ratios were favorable. As of July, Samsung Fire was at 80%, DB Insurance at 78.5%, Meritz Fire at 78.4%, KB Insurance at 78%, and Hyundai Marine & Fire Insurance at 77.9%. This means that favorable loss ratios have been maintained even after the COVID-19 period, when vehicle movement decreased. In fact, insurers have seen continuous net profit growth in auto insurance since recording a surplus in 2021. Despite already lowering auto insurance premiums by about 2% at the beginning of the year, there are calls for further reductions as part of win-win financial efforts.

A non-life insurance industry official said, "Since auto loss ratios tend to rise toward the end of the year, we need to observe the overall loss ratio a bit longer," adding, "The industry is also carefully considering win-win financial plans."

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