Potential Impact towards Financial Market Development through Insurance Industry Expansion Speaker: Jung-taeg (James) Chang, MBA Title: KOICA Advisor
Portfolio of Overall Operating Assets of Korean Insurance Companies (FY 2014) Unit: Billion USD (Note) Overall Total Assets (Operating + Non-Operating) Life Insurance: billion USD Non-Life Insurance: billion USD Combined Assets Amount: billion USD Cash & Deposits Securities (Bonds & Stocks) Loans (personal & cor porate) Real Estate Total Life Insurance Companies % % % % % Non-Life Insu rance Compan ies % % % % % Total % % % % %
Classification of Insurance Providers Category in terms of Operating Entity 1. Government - Social Insurance: National Pension Plan, National Health Care Program, etc.. - Mandatory Insurance: Compulsory Car Third Party Liability Insurance, etc.. 2. Private - Non-Life Insurance Companies: Property/Casualty - Life Insurance Companies: Annity, Early-Death Protection (EDP), Endowment (Savings/EDP) - Health Insurance Companies: Sickness, Disease, Disability 3. Government/Private - Reinsurance - Surety: Credit Guarantee
Assistance of Social/Private Insurance Scheme to National Wealth Growth 1. Enhancement of Social Welfare - Social Insurance: direct contributor - Private Insurance: supplementary contributor 2. Sustainability of Dynamic Corporate Activities - Sustainable Business Performance Anticipation through Insurance Protection - Easy Loan to SME through Surety Guaranty Provision to Financial Institutions 3. Supply of Gigantic Investing Capitals into Domestic Financial Market
Characteristics of Insurance Business 1. Statistics Business - Data: Raw Sources - Information: outcome from Data Process - Decision-Making for Strategy Development 2. Probability / Statics Techniques Business - Analysis - Forecasting 3. Underwriting Skills Business
Process of Insurance Cost (premium) Determination - In the first place, Assumed Cost applied, which was presumed by a few past years’ statics data - At the end, Actual Cost determined by I/O bottom-line, which was incurred during insurance contract period
Benefits from DB (Data Base) Quality Management 1. Precise Cost (Premium) Assumption 2. Effective/Efficient Decision-Making 3. Stable Profit Maintenance Management 4. New Market Opportunity Development
Insurance Industry Expansion vs. Financial Market Growth Insurance sector can be contributable to the growth of the domestic financial market by supplying large investing money into the capital market, which are internally retained or reserved while doing insurance business. How to Produce Substantial Investment Capital? - By continuous underwriting (insurance) business expansion into the current market - By penetrating into new or emerging markets through new products development such as long-term insurance products
Preconditions for Sustainable Growth of MN Insurance Industry 1. Centralized Insurance DB Research & Development Institution Establishment 2. Persistent Actuary Cultivation and Capacity Improvement 3. Underwriting Skills Advancement for the sake of Current Market Growth and Emerging Markets Development
Well-Prepared Statistics/Data Well-developed Actuarial Capacity Well-Advanced Underwriting Skills * Penetration of New Market (Market Opportunities) * Sustainability of Current Market Growth Increase of Operating Assets of MN Insurance Industry year by year Able to Supply More Capitals into MN Financial Market every year => Supportable to MN Financial Market Development Wrap-up