The insurance industry has unexpectedly benefited since 2020 as the spread of Covid-19 led to a favorable environment for the industry, such as low-interest rates, liquidity expansion, and restrictions on individual mobility. In terms of growth, the i...
The insurance industry has unexpectedly benefited since 2020 as the spread of Covid-19 led to a favorable environment for the industry, such as low-interest rates, liquidity expansion, and restrictions on individual mobility. In terms of growth, the industry has grown during the Covid-19 pandemic due to the high growth of savings insurance, variable insurance, and auto insurance despite the deterioration of the face-to-face channel environment.
In 2022, insurance premium growth conditions are expected to improve as the economy returns to normal. Thanks to the acceleration of the COVID-19 vaccination, the “post-Covid-19” becomes feasible, and sales from face-to-face channels would be gradually promoted if social distancing rules ease. Also, the recovery of private demand will stimulate the demand for individual insurance, and there is a good chance that rising market interest rates will reduce the burden of long-term insurance premiums. However, the diminishment of the Covid-19 reflection effect will appear unfavorable in the insurance industry’s growth, and the demand for certain insurance products will be decreased as savings motives are weakened and liquidity growth slows.
Meanwhile, there exist uncertainties in the 2022 insurance industry outlook. First, the tensions over ending Covid-19, including the emergence of variants of the virus, remain despite the mounting vaccinations rates. Second, consumer sentiment is likely to worsen if the household debt that has soared in economic policy normalization makes a hard landing.
The gross written premium for the life insurance industry is expected to fall below the nominal economic growth rates, slowing down from 4.3% in 2021 to 1.7% in 2022. Protection insurance is likely to maintain growth due to the rising demand for disease and health insurance despite the fall of growth in whole life insurance. Also, savings insurance will grow mainly attributable to the re-entering subscriptions of savings insurance upon maturity even though the interest rate of savings type insurance will be less competitive than other financial industries. Variable savings insurance gross premiums are expected to decrease since renewable premiums continue to decline as the preference for direct investment rises. Insurance gross premiums for retirement pensions are projected to increase 2.2% year-on-year in 2022.
The gross written premium on non-life insurance is expected to increase 4.9% year-on-year, showing high growth in 2022. Long-term non-life insurance gross premiums are projected to rise 5.2% as disease, injury, and driver insurance grow rapidly. Among long-term insurance, disease and injury insurance are expected to increase by 8.3%. Still, the growth rate is likely to slow down compared to the previous year since the inflow of initial premiums will be reduced as competition between insurers to expand coverage eases. Long-term savings insurance is expected to decline significantly, 21.4% year-on-year. The trend is likely to continue because the portion of savings type insurance is shrinking in the non-life insurer’s portfolio strategy focusing on protection type insurance. In 2022, non-life insurance retirement pension is projected to grow 8.0%.
The insurance industry should seek opportunities for sustainable growth away from low profitability and unstable relationships with insurance consumers. To this end, it should focus on establishing insurance market environments based on innovation and trust. In this regard, we present four significant tasks - market innovation, strengthening essential business capabilities, consumer trust, and ESG management - for the insurance industry in 2022. In challenging the four major tasks, the insurance industry is expected to expand its economic role in supporting the real economy and its social role in accumulating social trust capital.