South Korean reinsurance industry to reach $11.9bn in 2026

Written by Adam Cadle

27/09/2022

The South Korean reinsurance industry will grow at a compound annual growth rate (CAGR) of 7% from KRW9.6trn ($8.4bn) in 2021 to KRW 13.4trn ($11.9bn) in 2026, in terms of gross written premiums (GWP), supported by climate change and positive regulatory developments, GlobalData has predicted.

According to GlobalData, the South Korean reinsurance industry registered a 6.6% growth in 2021, recovering from a subdued 0.7% growth in 2020 due to the economic impact of the COVID-19 pandemic. General reinsurance accounted for 78% of the country’s reinsurance market, while life reinsurance occupied a share of 22%.

Swarup Sahoo, insurance analyst at GlobalData, commented: “Growth in 2021 was supported by the introduction of coinsurance in 2020 that allowed insurers to transfer various financial risks such as investment risk, interest rate risk, insurance risk, etc. to reinsurers. Also, the country’s susceptibility to natural disasters has increased insurers’ catastrophic risk and forced them to increase the portion of ceded premiums with reinsurers. This has also supported the reinsurance growth in 2021.”

The reinsurance market growth in South Korea will be supported by the expected roll out of the new capital regime, Korean Insurance Capital Standard - K-ICS starting from 2023, along with the continuation of the existing IFRS-17 regime.

Insurers will be required to maintain higher risk-based capital as per the new regime, which will result in squeezing their capital buffer and increasing the dependence on reinsurance. Reinsurers will also benefit from coinsurance as it allows insurers to manage capital effectively by transferring risks.

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