South Korea life insurance industry to hit $190bn by 2027, GlobalData forecasts

Written by Dan McGrath

11/09/2023

The South Korean life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 5.6% over 2023-27, from $154.2bn to $191.2bn, in terms of direct written premiums (DWP), according to GlobalData.

The life insurance industry in South Korea is expected to grow by 4.4% this year, driven by changing demographic factors such as low fertility and a rapidly aging population, which has led to an increase in demand for pension, long-term care and whole-life policies.

According to Statistics Korea, those aged 65 and over accounted for 17.5% of the total population of South Korea in 2022. This figure is expected to rise to 20% by 2025, leading to a significant impact on the demand for long-term savings life insurance products.

Pension insurance is the largest life insurance line in South Korea and is estimated to grow by 7% in 2023, accounting for a 36.5% share in terms of DWP.

The national pension schemes provides a basic level of retirement income, leading people to opt for supplementary pension insurance policies to augment their retirement corpus, driving the growth of the insurance line.

The Government’s tax incentives also make pension insurance more affordable, encouraging more people to invest in these products. Pension insurance is set to grow at a CAGR of 8% between 2023-27.

Endowment is the second largest insurance line, accounting for an estimated 14.4% of the DWP in 2023. It is set to grow 12% in 2023.

Along with life coverage, endowment insurance policies offer relatively higher interest rates as compared to other financial instruments such as bank deposits, which makes them an attractive investment alternative.

Insurance analyst at GlobalData, Prasanth Katam, said: “The South Korean life insurance industry is a developed market with a high penetration rate of 9.2% as compared to other regional countries like Japan (6.1%), India (2.9%), New Zealand (1.3%) and Australia (1.1%). Low fertility rates and a rapidly aging population will help in maintaining a modest growth in the life insurance industry over the next five years.

“With a steady increase in gross household disposable income, which is forecast to increase from $1.1m in 2023 to $1.3m in 2027, and a growing awareness about financial planning after the pandemic, endowment insurance is expected to grow at a CAGR of 7% over 2023-27.”

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