Variable Insurance Premium Surpasses W5 Trillion
By Yoon Ja-young
Staff Reporter
The first month insurance premium payment by variable insurance subscribers topped 5 trillion won last year. Variable insurance, which invests part of its premium in stocks, is expected to continue expanding its market thanks to an aging society.
According to the Korea Life Insurance Association, the first month insurance premium paid for variable insurance products, including variable whole life insurance, variable annuity and variable universal, totaled 5.1 trillion won for the fiscal year 2007 ending in March. This was nearly double the 2.6 trillion won first month premium paid the previous year.
Since first month premium payment means a new contract, the figure shows that the variable insurance market grew remarkably last year.
The market has been very popular during the last few years as subscribers expected high investment returns from the bullish stock market.
By products, variable annuity had notable growth. The first month premium for these grew to 3.5 trillion won from 1.9 trillion won in the 2006 fiscal year. In five years, the market has expanded tenfold, from a mere 346.4 billion.
The association said insurers raised 17.3 trillion won from variable insurance products last year, from contracts both new and old. It is more than 20 times bigger than the total variable insurance premiums collected in 2003, which totaled 762.1 billion won.
Life insurers had total assets surpass 300 trillion won last year, up 11.7 percent from a year ago, mostly thanks to the booming variable insurance market. Small insurers had first month premiums grow over eight hundredfold during the last four years, and those of foreign life insurers over tenfold.
Insurance companies are strengthening the development and marketing of these insurance products, as more people choose these products as preparation against retirement. Foreign life insurers think that the Korean variable insurance market still has room to grow, as the penetration ratio is still low in a country boasting a highly ageing society.