Annual Insurance Premiums at 1.46 Million Won

An increasing number of Koreans are buying insurance policies as people are more and more concerned about their retirements.

Experts noted that public awareness about insurance policies has significantly changed in the past few years, pointing out that the number of insurance policies in the nation has increased to that of the level of advanced countries and endowment insurance has exceeded savings insurance in sales.

Record high insurance levels per capita

The Korea Insurance Development Institute (KIDI) yesterday announced that during the fiscal year 2002 (from April 2002 to March 2003), per capita premiums were estimated at 1.462 million won, up by 67,000 won from 1.395 million won in FY 2001. The number was deducted by dividing the aggregate insurance premium by the nation`s total population.

The per capita premium rate stood at 458,000 won in 1990, before growing to 1.413 million won in 1997. The number stalled at 1.308 million won in 1998 and 1.311 million won in 1999, and rebounded to 1.461 million in 2000.

The sharp increase in per capita rates for premiums in the past year was believed to be attributable to people`s increasing concerns over their health and a comfortable life in retirement, which boosted the sale of annuities and lifetime insurance policies.

“Since policyholders want additional securities through customized contracts, per person premiums have been increasing,” said Ahn Gyung-chul, head of the dept. of trend analysis at KIDI. He also forecast that “demand is expected to grow further for items with wide coverage, such as health insurance and pension insurance”.

Endowment insurance outpaces savings insurance

For the first time last year, sales of endowment insurance, which mainly addresses future risks, exceeded that of savings insurance, which returned part of the premium payment at maturity to policyholders.

This is a newly emerging sign that Koreans` perception of insurance is changing to that of advanced nations.

According to the Financial Supervisory Service (FSS), during FY 2002, endowment insurance accounted for 51.1% of total sales in life insurance companies, exceeding sales of savings insurance at 48.9%.

The contribution of endowment insurance has been on steady increase from 26.9% in 1999 to 29.4% in 2000, and to 45% in 2001.

The penetration rate of insurance, referring to households which bought at least one life insurance policy, to the total number of households, has sharply increased to 86.2% (insurance in every sort included, such as insurance from post offices) in 2000, up from 36.4% in 1991 and 73.7% in 1997.

“The insured rate per household is an important tool to measure the maturity of the industry,” said Goh Jun-ho, manager at Samsung Life Insurance. “As the number of those who are preparing for their own futures has increased, the percentage of policyholders in Korea has increased from 50% in the mid-1990s to reach the same level as that for advanced countries.”

Chi-Young Shin higgledy@donga.com