Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
BNP Paribas Cardif, Chubb, ABL, MetLife losing customers here
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By Park Jae-hyuk
By Park Jae-hyuk
Mid-tier foreign life insurance companies appear to be losing their customers here, in contrast to their Korean peers, which have successfully prevented their clients from terminating their insurance contracts despite the COVID-19 pandemic.
Data compiled by the Korea Life Insurance Association showed Friday that the combined size of terminated insurance contracts with four foreign life insurers here increased from a year earlier, due to lapses and surrenders during the first 11 months of last year.
These data can be interpreted as resulting from a rise in the number of customers surrendering insurance policies without paying insurance premiums for a certain period of time.
In particular, the size of cancelled contracts with BNP Paribas Cardif Life Insurance over lapses and surrenders, jumped to 648.9 billion won ($585 million), up 88.6 percent from 344.1 billion won a year earlier.
Chubb Life Insurance Korea's cancelled contract amount also rose 19.7 percent to 1 trillion won, from 843.7 billion won. Cancelled contract amounts of ABL Life Insurance and MetLife Insurance Company of Korea showed 3.6 percent and 0.2 percent increases, respectively.
Some observers may attribute this phenomenon to the year-long coronavirus pandemic, given the fact that insurance policyholders generally terminate their contracts or decide not to pay premiums during economic recessions.
However, the total size of the cancelled contracts with 24 Korean life insurers here due to lapses and surrenders, declined 5.1 percent to 208 trillion won during the same period, because more customers of these Korean life insurers did not miss their premium payments.
Insurance industry insiders pointed out that aggressive marketing by foreign life insurers over the past few years was the main reason behind this phenomenon, saying such tactics have caused problems in their contracts.
“Foreign life insurance companies have faced more complaints from consumers over the past few years because their solicitors have tended not to provide enough explanation to customers to increase their market shares more rapidly,” a Financial Supervisory Service official said.
The recent exodus of global insurance giants from the Korean market is regarded as another reason for the trend of Korean consumers becoming reluctant to maintain their long-term contracts with foreign firms.
Prudential Financial sold its entire stake in Prudential Life Insurance Company of Korea to KB Financial Group last year.
In 2013, ING sold its majority stake in ING Life Korea to MBK Partners, a private equity firm that resold the life insurer to Shinhan Financial Group in 2019, after changing its name to “Orange Life Insurance.”
Lina Korea, a local subsidiary of the U.S. insurer Cigna, is also rumored to be getting sold off in the near future.
In the non-life insurance industry, AXA reportedly started attempts to sell its entire stake in AXA General Insurance last year, 13 years after it entered the Korean market.