The marine insurance business in South Korea encountered some rough seas in 2016 as the domestic shipping industry was greatly affected by a global downturn, in which Samsung Fire & Marine particularly struggled.
According to the General Insurance Association of Korea, direct premiums written by non-life insurers in 2016 dropped to KRW607.99 billion (US$544.17 million), down 14.26% compared to the previous year.
Marine insurance premiums experienced significant shrinkage in the first three quarters of 2016, with 19.88%, 14.33%, and 14.18% year-on-year drops.
Samsung Fire & Marine Insurance suffered a huge blow, with direct premiums written sinking by 38.65% to KRW98.89 billion (US$88.5 million). Combined with another drop in 2015, the insurer saw its premium income contract by more than half over the past two years.
Many marine insurers in Korea suffered downturns, but none were as worse as Samsung’s. Hyundai Marine Insurance, for example, saw its premium income decrease by just 5.6%.
South Korea’s shipping crisis, which saw two of its major shipping companies― Hyundai Merchant Marine (HMM) and Hanjin Shipping ― undergo creditor-led restructuring, is very likely linked to troubles of the marine insurance sector.
However, experts say that while the decline in marine insurance is unfortunate, it does not pose a major risk to the non-life insurance sector as a whole.
“Marine insurance is not the major business of non-life insurance companies. Hence, the decreased income in the marine segment would not pose a great threat to any firm,” a Seoul-based analyst told the
Korea Times.
“But obviously it is not good news. They would hope to bounce back in the area in line with the recovery of the shipping industry. One uncertainty is that it is not sure when the recovery would happen.”
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