Korea`s Oldest Non-life Insurer Marks 87th Anniversary

The history of Meritz Fire and Marine Insurance, which was founded in 1922 as Chosun Fire, is that of Korea’s non-life insurance industry. After changing its name from Chosun Fire to Oriental Fire, the company was renamed Meritz in October 2005.

A combination of the English word “merit” and the letter “z,” a contracted plural form, Meritz is an insurance company that gives customers numerous benefits. Though it sounds like a foreign company, the company is an 87-year-old indigenous insurer.

The company got a business license under Japanese colonial rule and competed with Japanese rivals. Despite facing many difficulties that threatened its existence such as social instability after Korea’s liberation from Japan, the Korean War and the government’s attempt to nationalize private assets, Meritz has continued to grow by committing itself to principles and transparent management.

○ The oldest non-life insurer in Korea

The company started operations in central Seoul on Oct. 1, 1922 following the management principles of “serving the people with insurance” and “being moderate and steady.” Since its inception, Chosun had struggled to compete with Japanese insurers including Tokyo Marine Insurance, but laid the groundwork for future prosperity by building its headquarters in 1935 in central Seoul.

Thanks to the momentum from the building’s construction and the subsequent expansion of its business, Chosun’s assets more than doubled to 16 million won in 1945 from 5.8 million won in 1935. In 1946, it published “Discussion on Insurance,” the country’s first publication on insurance.

With an aim to become one of Asia’s top-rate insurers, the company was renamed Oriental Fire and Marine Insurance in 1950. At that time, many companies re-branded themselves after the establishment of the Republic of Korea. Companies rushed to scrap not only Japanese names but also the term “Chosun.”

In 1956, Oriental became Korea’s first insurer to be listed on the stock market and traded publicly.

After being merged into the Hanjin Group in 1967, Oriental emerged as the country’s largest non-life insurer through raising the number of both employees and agencies. For the first time in Korea, its premium volume hit 10 billion won (7.8 million dollars) in 1976. The company, however, gradually lost its momentum from the mid-1970s and ranked in the middle in 1980.

A major shift came in October 2005 after Oriental broke off from the Hanjin Group. The fourth son of the late Hanjin founder Cho Choong-hun spun off the company and created the Meritz Financial Group. The group has units in non-life insurance, securities, investment banking, asset management and information service.

Also in 2005, the company moved its headquarters to Seoul’s southern district of Gangnam and renamed itself Meritz Fire and Marine Insurance.

Since then, Meritz’s original premium amount has risen from 1.9 trillion won (1.48 billion dollars) to 2.9 trillion won (2.26 billion dollars) in three years and net income grew some 20 billion won (1.56 million dollars) to 71.1 billion won (55.4 million dollars) in 2007. Assets topped five trillion won (3.89 trillion dollars) last year.

○ Sticking to principles and transparent management

The key to Meritz’s success is its commitment to principles and transparent management and profit-oriented growth strategies. It has chosen substance over appearance. If a project incurs excessive costs, has a weak revenue structure, or entails many risks, the company terminates the project without hesitation.

A case in point is home shopping channels. The company has no use for such channels because of the risk of incomplete sales that could undermine customer confidence. In the same vein, the company pays little attention to online car insurance, an area in which other insurers have scrambled to invest. Meritz says online business is not profitable because it can create excessive competition and high transaction fees.

Instead, the company focuses on long-term insurance, which the company believes is a safe profit source, through face-to-face sales. Though ranked fifth in sales among non-life insurers, Meritz tops long-term insurance sales, which grew to 25.8 percent last year from 19.1 percent a year ago.

The company values community work as well, setting up the public service teams “Ready Mates” in 40 provincial areas to conduct volunteer work once a month.

Meritz has received a Grade 1 rating for three consecutive years by the Financial Supervisory Service for its community service and customer satisfaction management. It also received a prize from the Korea Management Association for customer satisfaction management.

crystal@donga.com