The South Korean government has decided to lower reinsurance market entry barriers to promote competition in the sector.
The current Insurance Business Act considers reinsurance to be a part of non-life insurance. As such, the same regulations are applied to both sectors even though reinsurance is very different from direct insurance.
Hence, relatively excessive regulations for consumer protection have been applied to reinsurance despite the fact that it is used by insurance companies that are already well aware of insurance. As such, there have been calls for system improvement. The government is planning to separate reinsurance from non-life insurance as an individual sector in the insurance industry in this regard. Details will be discussed with reinsurance companies, industry associations, etc.
At present, every licensed non-life insurance company can transact reinsurance business without any request for approval. However, the request and approval process will likely become mandatory once the separation is completed. In addition, the sector is predicted to be classified in more detail. Specifically, it is likely to be divided into life reinsurance, non-life reinsurance and third-party reinsurance with the minimum capital requirement for approval lowered from 30 billion won to 10 billion won.