JUNE 17, 2020 02:49 PM (EDT)
AM Best: Profitability, Investment Challenges Prompt Negative Outlook on South Korea’s Non-Life Insurance Market (AM BestTV)
FOR IMMEDIATE RELEASE
OLDWICK - JUNE 17, 2020 02:49 PM (EDT)
Lee discussed the trends that have negatively impacted the South Korea non-life market.
“In the overall industry, net income dropped by 40% last year mainly because of increasing claims in the long-term and automobile insurance lines, which are the two major business lines in South Korea’s non-life sector,” said Lee. “For automobile insurance, which accounts for about 20% of total direct premiums, there were multiple factors that drove loss costs up in recent years, including a hike in repair costs, a rise in the minimum wage and growing claims from medical treatment. For the long-term insurance line, which is the largest business line in South Korea’s non-life sector, the main driver for the increased loss ratio was the surge of claims in the medical indemnity coverage, which accounts for about one-third of the total risks premium.”
Lee also addressed how non-life insurers are holding up against the pandemic.
“In South Korea, AM Best expects the impact of COVID-19 on the non-life insurers’ underwriting side to be minimal. Sales have been and will be inevitably disrupted for a while, especially in the face-to-face sales channels. AM Best did not see much decline in new business in the first quarter, but does expect to see an impact in the second quarter. Additionally, the impact on the overall top-line for premium income will not be material because of the large, recurring premium base of the long-term insurance line.”
To access the related market segment report, titled, “Market Segment Outlook: South Korea, Non-Life,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=297360 .
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