South Korea’s life insurance sector will grow to the world’s fifth largest market in a few years, according to Simon Machell, Aviva’s CEO for Asia-Pacific operations, reported Yonhap News.
“If I look in the next five years, South Korea in one of the five biggest markets in the world for new life and savings products to come through,” Simon Machell (pictured), told Yonhap News last week in a phone interview.
Aviva, the No. 2 life insurer in Britain, operates in South Korea as Woori Aviva Life Insurance Co. in partnership with the nation’s second-largest financial service firm Woori Finance Holdings Co. South Korea accounted for 21 percent of Aviva’s life and pension sales in Asia Pacific which represents 5 percent of its total business.
Aviva entered the local market for life insurance in 2008 after acquiring a stake in local insurer LIG life Insurance Co. for 137.2 billion won (US$121.2 million).
South Korea stood as the world’s eight largest market for life insurance as of 2008, with a gross premium of $66.4 billion. The United States ranked as the largest market while fast-growing China ranked as sixth biggest, according to the Korea Life Insurance Association.
(Source: Korea Life Insurance Association)
He said the South Korean insurance market, viewed as already saturated by some experts, still has room for further growth and Aviva sees opportunities.
“If you look at the wealth and growth of the country, there will be quite big enough demand (for life insurance policies)” even though there’s a lot of competition in the local market where a large number of big-size insurers compete, Machell said.
“There are still opportunities”.
He noted “the big area which will continue to grow is health insurance products” in South Korea where the insurance market is ripe enough and adopted all ranges of insurance types that further sophistication including sales of more tailored protection will lead the market expansion rather than introduction of new products.
The rate of South Korean households that hold life insurance policies fell for the first time in 30 years last year with 87.5 percent of households owning a life insurance policy with private insurers and public agencies, down 1.7 percentage points from 2006 and the first fall since 1976, according to the Korea Life Insurance Association.
(Source: Korea Life Insurance Association)
In the Korea Herald article Insurers’ IPOs seen as catalyst for change, it was reported that -
Although the industry has 13 domestic and 9 foreign insurance providers, the Korean insurance market is dominated by the top 3 providers, Samsung Life, Korea Life, and Kyobo Life, which collectively hold 53.2% of market share as of 30 September 2009.
Korea Life, the second largest life insurer in Korea, debuted on the Seoul bourse on March 17, marking the country’s second life insurance IPO following Tong Yang Life last year. No. 1 ranked Samsung Life is planning an estimated $4 billion float during the first half of the year, with both Kyobo Life and Mirae Asset Life set to follow suit.
Shinyoung Securities’ Oh noted that in Europe, Canada and elsewhere, IPOs or demutualization took place when the domestic market reached maturity.
“The IPO wave is a key development that will have long- and mid-term effects on the domestic insurance sector,” Oh Jin-won, an analyst at Shinyoung Securities Co., said.
It often brought about industry-wide consolidation or other major changes in the market landscape, he added.
Korea’s population is aging rapidly, creating demand for health-care and post-retirement insurance products. Currently, one in 10 Koreans are aged 65 or older but the ratio is expected to reach 14 percent by 2018.
(Source: Korea Herald, Yonhap, Aviva Press Release, Korea Life Insurance Association)
