The market for digital non-life insurance products in South Korea is expected to grow in the near future, as traditional insurers struggle with market saturation.
This, according to a Korea Times report, is shown by Hanwha General Insurance launching Carrot, the market’s first digital non-life insurer, in January. More players are likely to emerge soon, the report added.
Unlike banks, which are able to offer roughly the same services through their traditional and digital channels, insurers cannot offer all their products through digital.
Digital distribution methods favour simpler products such as travel insurance. This removes the extra costs that come with hiring agents to sell such products. Meanwhile, traditional non-life insurance policies usually have long-term coverage, have high costs, and are likely to have complicated terms. As such, face-to-face interaction with an agent or broker is necessary.
According to the report, Samsung Fire & Marine Insurance will launch a digital non-life insurer, in partnership with financial services platform Kakao Pay. The two industry giants are set to apply for preliminary approval from regulators next month.
Meanwhile, Hana Financial Group, which recently acquired The-K Non-Life Insurance, will transform the firm into a digital insurer.
“We expect more players to emerge as this is the trend in the industry,” Chung Sung-hee, non-life insurance research director at the Korea Insurance Research Institute, was quoted as saying in the report.
“This is because the market for traditional non-life insurers has reached saturation and there is also growing demand for simple insurance policies.”