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South Korea’s non-life insurance sector has reported worsening profits for the first quarter of 2019, due to intensifying competition and market volatility.
According to a report by The Korea Times, data from the Financial Supervisory Service (FSS) showed that non-life insurers' combined net profits stood at KRW718.9 billion (US$610 million) from January to March 2019, down 18% year-on-year from KRW880.9 billion (US$740 million).
The sector’s underwriting and investment incomes improved, but this was offset by growing expenses for sales and signing new contracts, due to greater competition in the market, the report said.
This contrasted with the life insurance sector, where combined net profits increased by 2.6% to KRW1.26 trillion (US$1.06 billion) in the first quarter from KRW1.23 trillion (US$1.04 billion) in the same period last year.
Data showed that life insurers’ profits were boosted by strong investment income, overcoming the losses incurred in sales.
“Uncertainty of the finance market is growing due to the volatility of stock prices and exchange rates stemming from the trade conflict between the US and China," the FSS said. “Insurers, instead of competing for sales, need to heighten internal competitiveness and enhance risk management amid market volatility.”
The regulator added that it will strengthen supervision and inspections to curb the negative effects of excessive sales expenditures, such as mis-selling and deterioration of insurers’ financial health.
