In 2020, the primary agriculture insurance market continued to grow steadily. In terms of original gross premiums, the crop insurance market increased by 38% to KRW 682 billion, while the livestock insurance market grew by 5% to KRW 220 billion.
However, profitability deteriorated as the loss ratio of crop insurance soared to 155% in the wake of spring frost, torrential rainfalls in the monsoon season, and three consecutive typhoons. Despite the heavy losses that the market experienced, our crop insurance business managed to minimize the retained loss ratio to 110% due to the government’s loss sharing and stop loss protection.
On the other hand, our livestock insurance business continued to perform fairly well, with the loss ratio falling to 70% as we have strengthened loss assessment and underwriting guidelines since 2019. Smaller heatwave losses and price improvements in the primary market also enabled us to maintain momentum for robust business results.
The primary market for natural perils insurance recorded a 20% growth in 2020 thanks to effective sales strategies and growing demand for coverage against natural perils. This led to a growth in our gross written premiums from natural perils insurance to KRW 23.1 billion.
However, the market suffered severe losses from typhoons as the Korean peninsula was hit by three typhoons in a row – Bavi, Maysak and Haishen – in late August and early September. It was highly unusual that three strong typhoons made landfall in rapid succession in Korea.
Moreover, the market was already reeling from heavy rain during the longest period of the monsoon season from late July to mid-August, which brought losses of KRW 3.7 billion to the natural perils treaty. The three typhoons and torrential rainfall drove our loss ratio up to 114% for the year.
Our overseas agriculture business had a challenging year as loss creep from 2019 continued to affect business results for 2020, pushing the loss ratio up to an all-time high of 99%. Premium income for the year slightly decreased to KRW 107 billion compared to KRW 114 billion in the previous year.
In response to these unfavorable conditions, we have exited non-profitable markets to stay focused on delivering profit over top-line growth based on selective underwriting. Our efforts toward geographical diversification have continued in a bid to ensure sustainable portfolio growth.
Heading into 2021, Korean Re will make sure that our portfolio management effort plays a key role in delivering better results for our overseas business. Domestically, we will remain well-positioned to foster markets for government-sponsored insurance as a reliable provider of reinsurance capacity. We will continue to lead the domestic reinsurance market for crop, livestock, and natural perils insurance by exclusively providing local insurers with access to ample capacity in the global reinsurance market.
Gross Written Premiums: Agriculture and Other Specialty Lines
(Units: KRW billion, USD million)
| FY 2020 (KRW) | FY 2020 (USD) | FY 2019 (KRW) | FY 2019 (USD) | |
| Domestic Crop | 216.4 | 181.6 | 333.1 | 283.1 |
| Livestock | 127.1 | 106.7 | 112.2 | 95.4 |
| Natural Perils | 23.1 | 19.4 | 18.0 | 15.3 |
| Overseas Agriculture | 107.1 | 89.9 | 114.0 | 96.9 |
| Total | 473.7 | 397.5 | 577.3 | 490.7 |
✽ Individual figures may not add up to the total shown due to rounding.