Seoul-based reinsurer Korean Re has become the first reinsurer to obtain a patent protection for its financial evaluation model.
Life insurers have been under pressure from financial authorities to set out criteria for evaluating the financial ability of the insured amid a growing number of insurance scams involving large death benefits.
Korean Re responded to the demand of the life insurance industry regarding the financial evaluation by successfully completing a year-long project to develop its own model customised to the needs of local life insurers in 2020.
The financial evaluation model is a system that enables life insurers to grade the financial conditions of the insured, such as earnings and occupation, in order to calculate the sum insured of a life policy.
It has been designed to apply a wide range of rules depending on the importance of input data and reflect the future value of assets and incomes so as to generate reasonable and objective outcomes, the Korean Re explained.
According to the announcement, no other reinsurer in the world has developed a client support system that is capable of calculating the sum insured based on the financial data of the insured.
In July 2020, Korean Re applied for a patent to protect its rights and gain credibility regarding the technical solution it had developed, which was granted in October, 2022.
Both Hye-Yun Ahn, Head of Domestic Underwriting Support and Woo-Jo Kim, Chief Underwriter of Domestic Underwriting Support from Domestic Life & Health Team at Korean Re have been responsible for the design and development of the model.
They commented: “As life insurers were struggling to establish financial evaluation criteria due to a lack of necessary data, we were motivated to support our embattled clients. Our model is capable of producing meaningful information because it is designed to evaluate both quantitative and qualitative information as opposed to the traditional method of using quantitative data only such as personal income levels and corporate financial statements.”
