South Korea’s long-term and general insurance segments are expected to experience moderate growth in 2025, according to a recent market report by credit rating agency AM Best. The agency highlights ongoing regulatory reforms that have strengthened Korean insurers’ capital management, contributing to a stable outlook for the country’s non-life insurance sector.
Published in June 2025, AM Best’s special report Segment Outlook: South Korea Non-Life Insurance notes efforts to improve profitability and refine investment strategies in the insurance industry. However, the report also points to challenges in the auto insurance segment, where slow growth and weakened underwriting profitability persist.
The report emphasizes that the South Korean non-life insurance market faces capital pressures due to rising insurance liabilities. This comes amid the Financial Supervisory Service’s (FSS) introduction of more realistic actuarial assumptions and a phased reduction of discount rates until 2027, aimed at enhancing the transparency and reliability of insurers’ financials.
Seokjae Lee, senior financial analyst at AM Best, commented, “These ongoing regulatory changes, combined with a downward trend in domestic interest rates, will place considerable strain on insurers’ solvency, particularly for those with weaker capital positions. However, these reforms are expected to encourage economic value-based capital management to maintain sound capital adequacy across the industry.”
Over the next year, AM Best anticipates moderate growth in South Korea’s insurance industry, with a renewed focus on profitability management in long-term insurance after years of intense competition. Mitigating solvency pressures will remain a key priority for insurers.
Despite a slowdown in premium growth in the motor insurance segment, larger insurers are expected to sustain growth by leveraging advantages in the rapidly expanding online auto insurance market, benefiting from economies of scale, strong marketing capabilities, and digital infrastructure. The slowdown is attributed to sluggish vehicle registrations and cumulative premium rate reductions designed to support consumers.
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