The direct written premiums (DWP) for the top 10 insurers in the South Korean life insurance industry grew by 4.1% in 2020 after declining at a compound annual growth rate (CAGR) of 3.3% during 2015-19, finds GlobalData, a leading data and analytics company.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “A drop-in market interest rate and aggressive marketing of savings-type products by insurers helped in reviving the demand for life insurance products in 2020.”

Term life, which accounted for 46% of the life insurance segment in 2020, grew by 4.2% as compared to the previous year. Similarly, endowment, which accounted for 36% share of life insurance segment in 2020, registered 9.8% growth.

South Korean life insurers also benefitted from the postponement in implementation of IFRS17 regulation to 2023. The regulation, which was earlier expected to be implemented in 2021, mandates insurers to set aside additional capital to sell savings-type products. Insurers were compelled to limit sales of such products prior to 2020. However, due to the change, they have continued with sales of endowment products to meet the increasing demand of savings products.

Despite witnessing premium growth, the combined market share of the top 10 life insurers declined from 78.1% in 2019 to 77.6% in 2020, due to aggressive marketing by smaller insurers. For instance, the premium of Samsung Life, the leading life insurer in South Korea, grew by 3.7% in 2020. However, its market share decreased from 22.1% in 2019 to 21.9% in 2020.

An analysis of GlobalData’s Insurance Intelligence Center reveals that seven of the top 10 insurers in South Korea registered growth in 2020 against decline in 2019. SK Life Insurance, the sixth largest life insurer in the country, registered the highest growth among the top 10 insurers with 24.3% growth in 2020.

The ranking of top five insurers has not changed in South Korea with Samsung Life and Hanwha Life being the top two insurers. Kyobo Life, the third largest life insurer, increased its market share from 10.7% in 2019 to 11.4% in 2020.

Mr Sahoo concludes: “Savings-type insurance products are expected to remain competitive against bank deposits and savings products due to declining interest rates. Revival in the country’s economy, declining unemployment rate as well as increased pace of vaccination will support the growth in South Korean life insurance industry over the next couple of years.”