The insurance industry of South Korea will encounter a “disruptive change” if its central bank raises interest rates, according to a senior official of the country’s financial regulator.
The Bank of Korea may raise the country’s interest rate in the next few months, making it the first tightening in over six years.
“You see in Korea, the biggest disruptive change to our insurance industry emerged when the ‘normal’ interest rate environment was redefined,” Kim Yong-beom, vice chairman of the Financial Services Commission, said during an insurance industry forum.
However, Kim did not elaborate on the change and how a rate hike could affect the insurance sector.
In the past few years, the US Federal Reserve has raised interest rates from the record-lows set during the 2008-2009 global financial crisis, according to a report by the Korea Herald.
Kim hailed the global “zero-rate” policy as a “powerful tool” to fight off recession.
“When I was a student, we were taught that fiscal policy is the main tool to fight business cycles, but now we know that free money is a very powerful tool – especially if conducted with global coordination,” Kim said. “We now have a formula on how to avoid recession.”
Related stories:
Korean government agency slammed for selling personal data to insurers
Global insurers will raise rates, say investors
Household debt, aging threaten South Korea’s economy
.jpg)
