South Korea’s Life Market in Focus

The latest from GlobalData as they look at growth prospects in South Korea;

South Korea’s life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 3.1% from KRW182.7 trillion ($139.8 billion) in 2025 to KRW206.2 trillion ($157.9 billion) in 2029, in terms of direct written premiums (DWP), according to GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, South Korea’s life insurance industry is expected to regain momentum in 2024 and 2025 after declining by 9.2% in 2023. The growth is expected to be driven by economic recovery and changing demographic factors such as an aging population that will support the demand for whole-life and pension policies.

Prasanth Katam, Insurance Analyst at GlobalData, comments: “The South Korean economy witnessed a slower growth of 1.4% in 2023 that affected the demand for life insurance products. GlobalData expects the economy to rebound and grow by 2.2% in 2024 and 1.8% in 2025, which will support the demand for long-term and pension products.”

Pension insurance is the largest line of business, which is expected to account for a 39.7% share of the DWP in 2024. It grew by 4.7% in 2024, driven by stable market conditions, leading to higher returns on investments.

The National Pension Service in South Korea reported a preliminary return of 9.2% on its investments, amounting to KRW97 trillion ($70 billion) during the first nine months of 2024. The increase is largely attributed to strong performance in its foreign equity holdings, prompting individuals to invest more funds in their pension plans. Pension insurance is expected to grow at a CAGR of 4.7% over 2025–29.

Whole life insurance is the second-largest line, with an estimated share of 12.4% of the DWP in 2024. It is expected to grow at a CAGR of 1.2% over 2025-29, largely driven by changing demographic factors.

South Korea is rapidly changing into a super-aged society. As per GlobalData’s macroeconomic data, the share of people aged 65 years and above is expected to reach 20.3% in 2025. It is expected to increase sharply and reach 39.4% by 2050, which will support the demand for whole life and pension policies.

Endowment insurance accounted for an estimated 11.1% share of premiums in 2024. It is expected to grow at a CAGR of 1.4% over 2025–29, driven by the demand for products offering higher returns.

According to the Bank of Korea, as of February 2024, the average interest rate on new deposits was 3.6%, a decrease of 4 basis points from the previous month. The decline in interest rates has supported the growth of endowment products, as they are an attractive investment option offering higher interest rates than other financial instruments.

Term life, general annuity, and other life insurance lines are expected to collectively account for an estimated 36.9% share of the DWP in 2024.

Katam concludes: “The South Korean life insurance industry is poised for steady growth, driven by economic recovery and changing demographics that are contributing to the demand for long-term care and pension solutions. The changing market dynamics will prompt insurers to offer policies for the aging population, which are likely to contribute to the industry’s growth over the next five years.”