AM Best has affirmed a stable outlook for South Korea’s non-life insurance market, citing ongoing enhancements in the country’s solvency standards that have bolstered insurers’ capital management.
The latest Best’s Market Segment Report, titled Market Segment Outlook: South Korea Non-Life Insurance, highlights moderate growth in both long-term and general insurance sectors, alongside efforts to improve profitability and investment strategies. However, growth in the auto insurance segment remains subdued, weighed down by slow expansion and declining underwriting profits.
The report details rising capital pressures driven by increasing insurance liabilities. This trend follows regulatory measures by South Korea’s Financial Supervisory Service (FSS), which has introduced more stringent actuarial assumptions and a phased reduction in discount rates through 2027. These changes aim to enhance the transparency and reliability of insurers’ financial reporting.
“Regulatory adjustments, combined with falling domestic interest rates, are expected to challenge insurers’ solvency, particularly for those with weaker capital buffers,” said Seokjae Lee, Senior Financial Analyst at AM Best. “Nevertheless, these reforms are likely to encourage value-based capital management, helping maintain robust capital adequacy across the sector.”
Looking ahead, AM Best anticipates moderate industry growth over the next year, with increased focus on profitability in the long-term insurance segment after several years of intense competition. The sector is also expected to prioritize strategies that alleviate solvency pressures.
In the auto insurance market, premium growth has decelerated due to sluggish vehicle registrations and ongoing premium rate cuts aimed at supporting consumers. The market has also seen rising concentration among major insurers. “With the rapid expansion of online auto insurance platforms, larger insurers are better positioned to sustain premium growth, benefiting from economies of scale, strong marketing capabilities, and advanced digital infrastructure,” added Chanyoung Lee, Director at AM Best.
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