KUALA LUMPUR, Oct 31 (Bernama) -- South Korea non-life insurance sector has a stable outlook, despite operating and regulatory environments that remain challenging for insurance companies according to A.M. Best in the Best’s Market Segment Report.
The report, “Market Segment Outlook: South Korea Non-Life” stated that although the overall market is facing increased top-line pressures and tightening regulations, the industry still expects improved underwriting profitability in the coming year.
In terms of underwriting performance, the industry’s overall combined ratio has faced two offsetting trends in the past four years with a decreasing loss ratio (mainly due to premium hikes in the long-term and automobile insurance lines) and an increasing expense ratio (a result of heightened competition in the long-term insurance line).
Market growth which had been strong until around 2012 has slowed in recent years from stagnant growth in the industry’s largest business line, long-term insurance including various personal line products such as accident, health, drivers, savings and annuities.
It is reported that slower growth in the second-largest business line, automobile insurance, as large companies began cutting rates in 2017, pushed overall market growth further down to 1.4 per cent year over year in the first half of 2018.
The main source of profits for South Korea’s non-life insurers is investment income and companies’ investment returns have demonstrated a slightly declining trend over the past five years.
Under current market situations with a lack of strong growth drivers, product innovation can be a key differentiator not just to fight for market share but also to secure higher profitability, a statement said.
Despite increasing administrative burdens on insurers, especially in the short term, A.M. Best believes that the whole industry will benefit from stronger capital and risk management in the future.
-- BERNAMA
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