South Korea’s Non-Life Insurers Face Capital Pressure Amid Regulatory Shift: AM Best

AM Best has upheld its stable outlook on South Korea’s non-life insurance sector, citing improved capital management driven by the country’s evolving solvency standards. The global credit rating agency acknowledged moderate growth in both long-term and general insurance lines, along with industry-wide efforts to boost profitability and refine investment strategies.

However, the auto insurance segment remains a weak spot due to slow premium growth and falling underwriting profitability, aggravated by rate cuts and fewer new vehicle registrations. AM Best also flagged mounting capital pressure as the Financial Supervisory Service (FSS) pushes for actuarial reforms and discount rate reductions through 2027, tightening solvency requirements.

Despite these challenges, AM Best sees the changes fostering stronger economic value-based capital management. Over the coming year, insurers are expected to prioritize profitability, especially in long-term insurance, as they navigate growing regulatory and market headwinds.