South Korea’s life insurance market is set to decline by 1.2% in 2020, as the ongoing coronavirus pandemic compounding pre-existing pressure from stagnating sales, according to GlobalData analysis.
Deblina Mitra, an insurance analyst at GlobalData, explained that lockdown restrictions due to coronavirus will further prevent new sales through insurance agents and, as a result, new business premiums which were already facing a declining trend could now drop even further.
Over the next few years, GlobalData expects South Korea’s life insurance business to grow at a compound annual growth rate of 0.9%, against the previous estimate of 2%.
“Low interest rate is another challenge for South Korean life insurance industry. Insurers have already been struggling to sell products with guaranteed returns, which are very popular in the country,” said Mitra.
“With the central bank reducing benchmark rates to 0.75%, it will further worsen insurers’ position on these products, ultimately impacting their sales.”
She added that life insurers could see a rise in claims in 2020 due to the Covid-19 outbreak as life insurance policies do not contain an exclusion for pandemics.
“As a result, business outlook for 2020 looks challenging for life insurers in South Korea with increasing pressure on profitability and decline in sale of new products.”
