Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Why does Kakao want an insurer?
KakaoPay CEO Ryu Young-joon / Courtesy of KakaoPay
By Kim Bo-eun
By Kim Bo-eun
Questions are arising over KakaoPay's plan to establish a non-life insurance arm, as the profitability of the sector has been deteriorating.
The financial services platform's plan is to set up a digital insurer that will focus on simple insurance policies. It has decided not to partner with other insurers, an official confirmed Monday.
While profitability has been sluggish for non-life insurers, KakaoPay's plan is to develop a niche market that existing players do not cover.
"We want to offer policies that mobile-focused users seek. For example, a person may want to be insured for only a certain risk among the many covered by an existing product," a KakaoPay official said.
While insurance premiums may be small, KakaoPay's rationale is that its platform will be able to attract large amounts of traffic that will guarantee a profit for the insurance firm.
Currently, KakaoPay offers simple products from other insurers, such as travel insurance.
It acquired insurance platform startup Inbyu last year, securing a general agency to sell insurance products.
KakaoPay's insurance division will be established as a separate entity.
"Our plan to offer new policies is what led to the decision not to partner with other insurers and set up an insurer on our own. The products we are aiming to offer are not what existing insurers specialize in," the official said.
"As a platform we may be able to sell other insurance policies, but to develop new products of our own, we concluded setting up a separate entity was necessary."
KakaoPay had initially considered partnering with Samsung Fire & Marine Insurance, but dropped the plan in May after disagreements over the offering of auto insurance policies.
The plan to begin an insurance business comes as the young generation increasingly seek policies they need voluntarily, mostly finding the information they need online.
This is a shift from the practice that has kept the insurance industry afloat, which was for insurance sales agents to approach customers and convince them to sign up for policies.
“Insurance agents have been at the center of the insurance market until now,” an industry official said.
“It can be said that policies were designed to cover many risks at a high premium, as a means to ensure the agents are paid. This has prevented the development of simple insurance policies that there is a demand for,” he said.
KakaoPay was launched in April 2017 offering payment and money transfer services. It has grown into a comprehensive financial platform with an affiliated brokerage unit ― KakaoPay Securities. KakaoPay has had an advantage over rival fintech firms because of its accessibility via Kakao Talk, the No. 1 mobile messenger here.
The company is currently waiting for approval from the financial authorities to launch its insurer.
"Our plan is to launch the company as soon as possible, as we have been talking about establishing this insurer since last year," the official said.
If the company files for preliminary regulatory approval within this month, it may receive preliminary approval by the end of the year.
KakaoPay's plan to set up a digital insurer unfolds as rival fintech firms establish their own insurance units.
Financial services platform Toss in 2018 launched Toss Insurance, which sells products of other insurers.
Naver Financial, the financial services subsidiary of the portal giant, has also set up an insurance sales unit that is expected to offer the same policies of existing insurers. Such channels are expected to have enormous influence over insurers given the traffic they generate.