AM Best sees South Korea's non-life growth in health and property lines

Ongoing regulatory changes are driving insurers to strengthen capital.

AM Best has maintained a stable outlook for South Korea’s non-life insurance sector, citing strong capital management efforts, moderate growth in long-term and general insurance, and strategic profitability measures, despite economic headwinds and pressures in the auto segment.

Ongoing regulatory changes from the Financial Supervisory Service, including lower discount rates and a potential core capital requirement under K-ICS, are driving insurers to strengthen capital through longer-duration assets, selective capital issuance, and reinsurance.

Long-term insurance continues to support growth, particularly in health products, with insurers focusing on increasing contractual service margins under IFRS 17.

However, macroeconomic uncertainty and competition could weigh on future growth.

General insurance is expected to remain stable, supported by demand in property and liability lines.

Auto insurance faces stagnant premium growth and profitability pressure due to inflation and rate cuts. 

Larger insurers are gaining market share through digital platforms, whilst smaller players struggle to compete.

Investment income remains a key earnings driver, with insurers benefitting from higher-yield bonds secured during elevated post-pandemic interest rates.

Despite slowing GDP growth and trade tensions, AM Best expects the sector to remain resilient, supported by solid capital buffers and improved risk management.