- The Korea Times

Kim Young-ran, executive vice president at Samsung Fire & Marine Insurance's IT Innovation Team, poses during an interview with The Korea Times at the former's headquarters in Seoul. Courtesy of Samsung Fire & Marine Insurance

Embracing cultural diversity crucial for ESG management

By Lee Min-hyung

Most Korean financial firms are still globally disconnected, as few of them attempt to take on challenging and innovative tasks due to the country's outdated network separation rules, a renowned digital expert said in a recent interview with The Korea Times.

"Physical connectivity is crucial for any financial firms to compete against their global peers, but this is not possible in Korea as all the financial firms have to abide by the long-held network separation restrictions here," Kim Young-ran, executive vice president at Samsung Fire & Marine Insurance, told The Korea Times.

Korea's financial authorities introduced the rule back in 2013 when servers and networks of major commercial banks failed. Financial watchdogs then decided to introduce the restriction all across the financial sector. Under the rule, the intranets of financial firms have been physically separated from the internet, all in the name of security.

Nonetheless, the decade-long regulatory hurdle has ended up preventing financial firms here from catching up with global trends, according to Kim.

"Overseas companies invest a lot in security solutions even after they separate network systems, in order for their employees to work efficiently under the global standard, but this is not the case in Korea," she said. "This regulatory obstacle forces people from the financial circle here to become more and more complacent in the workplace. They argue they cannot try something new due to the network separation rules, and most of them appear to end up settling for the status quo."

Kim is one of the most experienced digital experts in the nation's insurance industry. She joined Samsung Fire in January 2023 after ending her three-year career as Swiss Re's group CTO. She also worked for ING Japan as CTO for more than two years between 2007 and 2010 before moving to Allianz in Hong Kong where she took on the same role for more than eight years.

"When I came back to my home country, I had meetings with officials from popular tech-savvy fintech companies here, but they were also not different from other conventional financial firms. Most of them did not have a clear grasp of the global trend, and appeared to fall into a trap of complacency because of their decent performance in the domestic market."

Embracing diversity

Kim is a rare female executive in the conservative insurance industry. She said Korea is still lagging far behind Europe in terms of embracing diversity in the workplace.

"Cultural diversity should be respected in Korea ― regardless of gender, race, age or experiences ― and this is the very beginning for innovative and sustainable corporate growth," she said. "Looking back on my experiences in major European insurers in France, Germany and Switzerland, women accounted for more than 30 percent in the department chief position, and the ratio of women executives also reached around 20 to 30 percent there. At some companies, women outnumber men in the front-line manager position."

Women executives account for around 15 percent at Samsung Fire, but the ratio is growing each year, according to Kim.

"All the employees should be given equal opportunities and companies need to support flexible work environments. Korean companies should offer enough support for pregnant women and guarantee to help them continue building their career even after maternity leave."

She expected Korean financial companies to rapidly catch up with global environmental, social and corporate governance (ESG) standards.

"European companies pay much more attention to ESG management than those in Korea," she said. "Korea is also on track to embrace the paradigm. But the total number of women leaders in the financial industry looks to be too small for the time being."

Kim Young-ran, executive vice president at Samsung Fire & Marine Insurance's IT Innovation Team, speaks during an interview with The Korea Times at the former's headquarters in Seoul. Courtesy of Samsung Fire & Marine Insurance

Samsung Fire's digital roadmap

Earlier this year, Samsung Fire announced its mid-term vision of becoming a "hyper-connected" financial company by expanding its role beyond conventional insurance.

As a leader of the firm's IT Innovation Team, Kim and her team members decided to adopt what it called the ABCD strategy for its major digital leap forward.

A refers to artificial intelligence (AI). Insurers here and abroad have used AI-powered chatbot services, but now is time for insurers to make the technology more sophisticated and allow AI to fix solutions concerning key tasks insurers face, she said.

"We need to keep developing machine learning capabilities and let AI find and fix solutions on its own," she said.

Samsung Fire & Marine Insurance headquarters in Seoul / Courtesy of Samsung Fire & Marine Insurance

Secondly, B stands for best systems, for which Samsung Fire pledged to enhance its security solutions.

"Under the global regulatory environment, demand for accounting transparency, fiscal soundness and security is ever-growing at an alarming pace," she said. "We should keep updating and making our insurance systems more sophisticated."

Cloud computing comes next.

"We constantly discuss how we can optimally adopt cloud computing under the current regulatory environment and private information protection," she said.

Last but not least, the executive went on to underscore the importance of increasing data usage.

"For now, financial firms spend too much time in analyzing data, but it should be kept short down the road," she said. "We need to widen the usage of data to compete against digitally giant tech firms. Data allows us to keep track of customers' needs and behaviors."

Competitive edge over Big Tech firms

The local insurance market is being saturated at a rapid pace amid Big Tech firms' aggressive inroads into the insurance sector.

Kim said their expansion looks threatening enough from the perspective of conventional insurers.

"Big Tech firms focus solely on 'profitability,' but do not contemplate deeply on philosophy and potential risks," she said. "One upside is that their products are more customer-oriented than conventional insurers, but this does not mean that they can operate insurance businesses as stably as conventional insurers. The loss ratio of some new digitally-oriented insurance players hovers at four-digit figures, but legacy insurers have a clear understanding of risk management, and take much more time to make sure that their insurance products are good for their customers."