Best’s Market Segment Report: AM Best Maintains Stable Outlook on South Korea’s Non-Life Insurance Market

HONG KONG--(BUSINESS WIRE)--AM Best is maintaining its stable outlook on South Korea’s non-life insurance segment, citing improved performance of the long-term insurance line of business and greater stability in auto profitability.

In a new Best’s Market Segment Report, “Market Segment Outlook: South Korea Non-Life Insurance,” AM Best states that long-term insurance, the largest business line in the non-life industry, maintained stable growth of approximately 4% in 2022 due to continued expansion of the recurring premium base and strong new business generation from health products.

“The cumulative effects of prior rate hikes in the medical indemnity line, along with regulators’ active involvement in controlling moral hazard claims and overtreatment—in particular, cataract surgery—since the first half of 2022 has helped boost carriers’ profits,” said Chanyoung Lee, director, analytics, AM Best. “Insurers also have been expanding sales of high-margin health products to secure their future profit base under IFRS 17, which became effective in 2023.”

Premium growth in the auto insurance segment was subdued at 2% in 2022, but the combined ratio saw slight 0.5-percentage-point improvement to 96.9%. AM Best expects upward pressure on the auto insurance segment’s combined ratio following the post-pandemic rebound in claims frequency and the rise in vehicle repair costs and minimum wage due to inflation. However, expanded online sales and newly implemented regulations that reduce traffic accidents should help insurers maintain overall profitability.

While AM Best expects that IFRS 17 is likely to bring more stability in reported financials for many South Korean insurers, given the use of active assumption sets in IFRS 17, the change in actuarial/economic assumptions with the new standard could bring widely varying impacts on reported capital and earnings.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=333004.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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