The Financial Services Commission (FSC) of South Korea plans to allow third-party digital platforms to sell non-life and micro-insurance as part of the country’s financial ‘sandbox’ program. The move is expected to increase the e-commerce share in South Korea. The sandbox program aims to promote insurtech companies by easing regulations and encouraging innovation, says GlobalData, a leading data and analytics company.
GlobalData reveals that e-commerce channel accounted for 81.4% of life insurance premium but just 4.5% in non-life segment in 2019. On the other hand, agencies accounted for 44.3% of non-life insurance premium during the year.
Mahitha Kasireddi, Insurance Analyst at GlobalData, comments: “This is primarily due to complicated terms and risk coverage associated with non-life policies which need interaction with brokers or agents. Currently, e-commerce sale of insurance is through insurance entities only and the new regulation will allow third-party digital providers. The changes in regulation once implemented will help increase the share of e-commerce channel in the non-life segment to 7.7% in 2024.”
Ms Kasireddi continues: “The proposed policy changes allowing digital platforms will induce competition in the market and lead to product innovation.”
The social distancing measures due to the COVID-19 pandemic provided much needed push for digital distribution channel in 2020. For instance, in February 2021, Kakao Pay, the country’s leading mobile payments service provider, applied for digital non-life insurance license in partnership with Samsung Fire and Marine Insurance. In January 2021, Hanwha General Insurance launched Carrot – the country’s first digital non-life insurer.
Ms Kasireddi concludes: “The push by FSC is expected to encourage more digital platforms to enter the market. The success will depend on final guidelines during the implementation and a balanced regulatory system with level playing field to both insurers and third-party providers.”
.jpg){kind=tracking}
