‘BoheomPay’ Is Not Optional but Essential... "Must Make Good Use of Electronic Transactions"

Analysts suggest that insurance companies should leverage digital-based consumer methods, such as electronic payment services, as a breakthrough strategy for low growth.

According to the Korea Insurance Research Institute on the 6th, with the amendment to the Electronic Financial Transactions Act (EFTA) set to take effect in September, the insurance industry is expected to venture into new businesses based on digital and data. It is analyzed that they should strategically utilize electronic payment services to secure consumer touchpoints and gain new business opportunities.

The EFTA is a law established to ensure the safety and reliability of electronic financial transactions and to promote the sound development of electronic financial businesses. The amendment to the EFTA, which focuses on strengthening regulations on prepaid services, passed the National Assembly last year.

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There is an analysis that the insurance industry, facing a low-growth environment, should use electronic payment services to increase consumer touchpoints and market control. Electronic finance can provide financial services without constraints of time and space, making it the channel with the closest contact with consumers. In particular, prepaid electronic payment services can generate a ‘lock-in effect’ due to the balance remaining after charging and usage.

New businesses can also be launched using data secured from electronic payment services. Insurance companies can conduct risk and credit analysis based on payment and non-financial data, then provide risk management services or link loan services.

In fact, overseas insurance companies actively utilize electronic financial services such as prepaid cards and postpaid payments. Singapore-based digital insurer Singlife acquired the mobile payment company Canvas in 2019 and provided prepaid debit cards to life insurance subscribers. Thanks to securing card consumer data, Singlife expanded into family finance business.

Australia’s insurtech company Coverpay is a platform startup that provides insurance premium payment services. Platform users can pay insurance premiums in 12 installments using BNPL (Buy Now Pay Later) products. Additionally, users can utilize overall insurance services such as finding insurance policies or claiming premiums within the platform.

Son Jaehee, a research fellow at the Korea Insurance Research Institute, said, “If electronic payment services are not utilized, there is a risk of weakening market position and losing opportunities to preempt new market areas.” He added, “However, costs associated with market entry may be incurred, and sufficient measures for financial consumer protection and cyber risk preparedness must be ensured. It is important to approach this from a long-term perspective rather than aiming for short-term profit generation.”

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