The domestic long-term insurance market continued its growth in 2020, with direct premiums increasing by 5.3%. The growth of the market was largely driven by rising sales of long-term personal accident and disease insurance products. The market also witnessed greater interest in long-term property insurance in the wake of an unusually long rainy season in the summer and a series of typhoons that hit Korea in 2020.
Of particular note, COVID-19 has had a positive impact on the long-term insurance market, lowering the loss ratio to some degree. This was presumably because there was a drop in outpatient visits to hospitals for non-urgent and elective medical treatments amid worries over possible exposure to the coronavirus.
In 2020, Korean Re reported KRW 2,408 billion in long-term insurance premiums, up 5.7% year on year. The combined ratio before management expenses improved by 0.4%p to 100.2% as we continued to focus on writing more profitable risks by working closely with direct insurers to develop new products. However, the loss ratio of the medical expense insurance business remained high, leading the combined ratio to exceed 100%.
The outlook for the long-term insurance market in 2021 does not look much different from the previous year. Market growth will be supported by an increase in medical expense insurance rates and intensive marketing efforts by insurers to sell newly developed products, especially those that target the elderly or people with chronic or pre-existing conditions.
Heading into 2021, Korean Re remains ready to provide appropriate reinsurance programs in a way that supports the sustainable growth of insurers offering long-term insurance coverage. As insurers have been working to brace themselves up for the upcoming implementation of IFRS 17, we will stay more responsive than ever to their needs by providing necessary risk transfer solutions and solvency capital relief. We will also continue to support the market with analytical research for product development and underwriting services. These efforts will put us on a solid footing to achieve growth and enhance profitability based upon our sound business portfolio.
Gross Written Premiums: Long-term
(Units: KRW billion, USD million)
| FY 2020 (KRW) | FY 2020 (USD) | FY 2019 (KRW) | FY 2019 (USD) | |
| Long-term | 2,408.0 | 2,020.5 | 2,277.7 | 1,936.0 |