HONG KONG--(BUSINESS WIRE)--AM Best is maintaining its stable outlook on South Korea’s non-life insurance market, due to the segment’s record profitability as a result of significant improvement in automobile results and steady investment performance.
AM Best notes in its Best’s Market Segment Report, titled, “Market Segment Outlook: South Korea Non-Life Insurance,” that the non-life insurance industry’s net profits rose by 72% in 2021 to a record-high of KRW 3.7 trillion (USD 3.0 billion), thanks to markedly improved underwriting performance, especially in the automobile insurance line. “Although automobile claims are likely to rise in 2022 given the lifting of most COVID-19 restrictions, the larger premium base resulting from previous rate increases, as well as improving cost efficiency, will help the industry effectively manage its automobile profitability over the next 12 months,” said Chanyoung Lee, associate director, analytics, AM Best.
Overall, South Korea’s non-life industry registered solid premium growth of 4% in 2021, with gross premium written of KRW 89 trillion (USD 72.1 billion). The segment remains under pressure owing to elevated medical claims in the long-term insurance segment, driven by an increase in moral hazard and over-treatment by clinics and hospitals. However, the overall profitability of the long-term insurance line improved slightly, mainly because of a decline in the expense ratio due to subdued market competition.
Investment performance was largely stable in 2021. Despite a slight decline in investment yield, a continuously expanding asset base supported overall investment earnings, which increased by 4% from 2020.
AM Best expects South Korea’s non-life companies to see stable top-line expansion over the next 12 months, with growth supported by stable development in the long-term insurance line, driven by insurers’ continued efforts to increase sales of profitable health insurance and improve their persistency ratios.
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AM Best is a global credit rating agency, news publisher and data analytics provider specialising 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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