There have been demands for prospective political support for financial authorities besides from promotion of online sales channels and deregulation of micro-insurance companies’ capitals to vitalize South Korea’s Insurtech industry. While China’s micro-insurance market has grown rapidly as Chinese Government has eased relevant regulations, South Korea’s micro-insurance market is still in its infant stage.
“Chinese Government has eased relevant regulations and has maintained supervisory policies that are business-friendly.” said Jung Sung-hee, who is a research member for Korea Insurance Development Institute through ‘Expansion and Implication of China’s micro-insurance market’. “These flexible policies have become foundation for ZhongAn Insurance to become a top 10 global FinTech company.”
South Korean industries are also emphasizing the need for prospective regulations and policies by financial authorities for Insurtech to become a new driving force for its insurance market.
Chinese Government has eased regulations on financial services provided by FinTech companies to prioritize promotion of relevant industries and it has applied regulations to negative methods that strengthen supervision on problems that may occur afterwards.
As a result, Chinese Insurtech market has grown rapidly. It is estimated that Chinese Insurtech market will grow from being worth $37 billion in 2015 to $174 billion in 2020 based on premium by an annual average rate of 36%.
In China, a concept of buying insurance at an inexpensive premium for small dangers that may occur in daily lives and buying insurance again whenever it is necessary is becoming more of a norm. Main micro-insurances in China are return insurance, delayed flight insurance, traffic congestion insurance, and parking ticket insurance.
On the other hand, South Korea’s micro-insurance market is still in its infant stage. Although financial authorities have been working on improving relevant systems by promoting online sales channels, minimizing insurance membership procedures, and easing regulations on capitals of micro-insurance companies to vitalize micro-insurance market, amount of their performance is not significant. Because premium for micro-insurance is about $8.89 (10,000 KRW) on average, it does not have huge impact on profitability of insurance companies.
“Because premium for micro-insurance is about $8.89 on average, amount of profitability is not that much.” said a representative for an insurance company. “However, we are carefully examining possibilities of micro-insurance due to its marketability.”
However, as internet insurance companies and Insurtech companies are showing more interests towards micro-insurance, it is expected that relevant products will be launched one after the other in the near future. Actually, Bomapp is planning to sell micro-insurance through its application starting from 2019.
“Recently, South Korean insurance companies have started to provide their products through partnership with internet businesses and others and we are expecting that online insurance companies that professionally handle micro-insurance will start to make their appearance shortly.” said Jung Sung-hee. “There is a need for insurance companies to expand their roles as service providers that satisfy consumers’ demands in time.”
Staff Reporter Park, Yoonho | yuno@etnews.com