A pedestrian passes by a sign of the Association of Southeast Asian Nations (ASEAN) in Jakarta, Indonesia, July 10. AP-Yonhap
As Korea's birthrate hits a record low, local insurance companies are increasingly expanding their operations overseas. Among the targeted regions, the Southeast Asian market ― characterized by a high percentage of young people and rapid economic growth ― is emerging as a "blue ocean" for these firms.
"The insurance market in Southeast Asia is a highly specialized market where the middle class is growing and infrastructure is actively improving," the Korea Insurance Research Institute (KIRI) noted in a report released on Thursday. "Demand for insurance from the middle class in five countries (Malaysia, Thailand, Indonesia, the Philippines and Vietnam) will drive the insurance market going forward."
Korea's declining birthrate is placing a significant burden on local insurance companies, particularly life insurers, which need to attract new customers to sustain their businesses.
According to recent data from Statistics Korea, the average number of children a woman is expected to have in her lifetime dropped to 0.7 in the second quarter of 2023, a decrease of 0.05 from the previous year. This marks another record low since the agency began compiling such data.
The Korean market is also believed to have reached saturation, as the majority of people have already signed up for life insurance.
Data from the Financial Supervisory Service (FSS) revealed that profits for 23 local life insurance companies decreased by 6 percent year-on-year in 2022. In contrast, 31 property insurers saw their profits increase by 26.6 percent over the same period.
"Recent moves by the authorities to allow financial firms to own non-financial subsidiaries overseas are viewed as positive developments," KIRI stated. "Until recently, overseas expansion was considered a strategic option for large insurance companies. However, small and medium-sized insurers should also now actively consider extending their operations abroad."
Currently, 11 insurance companies operate 28 local subsidiaries and 39 local branches across 11 countries, including Vietnam, Indonesia, China and the U.S.
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