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

HONG KONG--(BUSINESS WIRE)--AM Best has maintained its stable outlook on South Korea’s non-life insurance segment, supported by enhanced regulatory frameworks and solid investment performance.

According to the Best’s Market Segment Report, “Market Segment Outlook: South Korea Non-Life Insurance,” the country’s regulatory environment supports the stable outlook as regulatory changes are strengthening capital quality, solvency resilience and consistency in IFRS 17 reporting. The introduction of the core capital K-ICS ratio, which is effective January 2027, is expected to induce insurers to focus on improving fundamental capital with higher loss absorption features and prevent overreliance on supplementary capital securities.

South Korea’s non-life industry experienced a decline in its underwriting results in 2025, reflecting higher loss ratios in long-term and auto lines. Auto insurance profitability also deteriorated due to the cumulative effect of premium rate cuts from prior years and ongoing claims-cost inflation. Although a recent premium increase should provide support, the benefit will be recognised gradually through the earned premium base rather than immediately. The long-term insurance line of business is still experiencing claims pressure following the end of the medical strike in 2024, while persistent competition also has weighed on profitability.

“Because of the intense competition, some market leaders with stronger balance sheet capacity and solvency positions are looking beyond the domestic market for new growth opportunities. These efforts could support earnings diversification and long-term growth, although they necessarily entail a level of execution risk and short-term capital volatility,” said Seokjae Lee, senior financial analyst, AM Best.

Chanyoung Lee, director, analytics, AM Best, added: “Although underwriting performance in South Korea’s non-life insurance segment weakened in 2025, investment income improved materially, supported by higher interest income, and in some cases, gains from asset disposals and valuation gains. AM Best expects investment performance to remain a stable source of profits over the next 12 months, partly mitigating the pressured underwriting profits.”

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=366691.

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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