South Korean life insurance companies recorded increased sales of savings-type insurance in April, reversing a trend that had seen these products sidelined in favor of protection insurance. New contracts for individual savings insurance reached 245,854 cases totaling 14.1923 trillion won in April, up approximately 1,000 cases and 400 billion won compared to the same period last year, according to the Korea Life Insurance Association on the 19th. The shift occurred as the KOSPI stock index exceeded 9,000 points, driving demand for variable annuity insurance products. Since the adoption of IFRS17 accounting standards, domestic life insurers had prioritized protection insurance to secure Contract Service Margin (CSM), a core profitability metric, while savings insurance was classified as a liability and considered less favorable for CSM calculations.
April Savings Insurance Sales Rise While Protection Insurance Contracts Decline
Data from the Korea Life Insurance Association showed that individual savings insurance new contracts in April totaled 245,854 cases and 14.1923 trillion won. Compared to the same period last year, this represented an increase of approximately 1,000 cases and 400 billion won. In contrast, protection insurance new contracts declined from 4.0348 million cases to 3.7984 million cases, with contract amounts falling from 53.1287 trillion won to 47.1651 trillion won.
Following IFRS17 implementation, South Korean life insurers focused on protection insurance to secure CSM. Whole life insurance and savings insurance faced larger loss recognition, classifying them as lower-profitability products. Savings insurance in particular was recognized as a liability, creating disadvantages in CSM calculations.
KOSPI Rally and Rate Hikes Drive Variable Annuity Demand
Variable annuity insurance sales increased notably as the KOSPI surpassed 9,000 points this year. Annuity savings reserves at domestic life insurers expanded from 74.2312 trillion won at the end of last year to 74.613 trillion won at the end of the first quarter.
Toss Insurance analyzed customer data from contracts made through agents on the Toss app during the first half of the year. The analysis showed annuity insurance new contracts increased 78.1% year-over-year, with variable annuity insurance products occupying six of the top 10 sales positions.
The Bank of Korea raised the benchmark interest rate on the 16th, marking the first rate increase in three years and six months.
Insurers Expand Annuity Product Lineups Amid Shifting Market Conditions
Life insurance companies have been launching annuity insurance products and insurance products with annuity conversion features. An insurance industry official stated that the combination of the stock market boom and rising interest rates has created clear momentum for pursuing both investment returns and long-term lump-sum savings. The official explained that insurers are moving away from short-term CSM metric focus and strengthening their annuity insurance lineups to secure stable long-term asset management funds.
FAQ
What sales changes did South Korean life insurers record in April?
Savings insurance new contracts reached 245,854 cases totaling 14.1923 trillion won in April, up approximately 1,000 cases and 400 billion won year-over-year. Protection insurance new contracts declined from 4.0348 million cases to 3.7984 million cases, with amounts falling from 53.1287 trillion won to 47.1651 trillion won.
Why did variable annuity insurance sales increase?
Variable annuity insurance sales rose as the KOSPI stock index exceeded 9,000 points this year. Toss Insurance data showed annuity insurance new contracts increased 78.1% year-over-year in the first half, with six variable annuity products ranking in the top 10 sales positions.
What policy change did the Bank of Korea implement on the 16th?
The Bank of Korea raised the benchmark interest rate on the 16th, marking the first rate increase in three years and six months.
