Allianz Global Corporate & Specialty (AGCS), the first foreign non-life insurer in almost a decade to receive regulatory approval from South Korea’s Financial Services Commission (FSC) to open a branch in Seoul, has recorded a strong start to its operations in the country and is on track with its target of attaining EUR100mn within five years of opening. In 2017 AGCS’ total premium income for South Korean business totaled more than EUR40mn, equivalent to about 10% of overall AGCS Asia business.
Delivering on Growth Opportunities
“We have been active in this thriving market for several years. Since opening the local office in June last year, we have been able to serve both local South Korean and global companies with South Korean interests much more efficiently,” said Chang Tae Noh, CEO of AGCS South Korea Branch.
South Korea is the world’s 11th largest economy and the 4th largest in Asia. AGCS estimates that the Asian non-life insurance market currently accounts for about 30% of global market premiums and AGCS expects this to grow approximately 5 per cent each year.
In particular, AGCS sees significant opportunities for growth in the corporate and specialty insurance segment in South Korea. The country’s rising number of large infrastructure projects in railways, ports and subway lines, and a focus on environmental liability require tailored insurance solutions for relatively large risk exposures. In addition, the South Korean economy receives strong contributions from the automotive electronics and high-tech communication industries, all of which complements AGCS’s areas of specialist expertise.
“We have seen an increase in demand for global insurance programs as more South Korean firms look to expand overseas as well as from the growing pool of global corporations with South Korean interests. AGCS is one of the very few global insurers to focus exclusively on the needs of global corporate and specialty clients. Our expertise in serving clients with international activities will allow us to provide the best coverage for clients as they seek to compete on a global scale. Already, more than 11% of our global clients have operations in South Korea protected under our international insurance programs,” added Noh
Strong Demand for Liability Based Products
Besides traditional property and liability concerns, new emerging risks such as product recall, environmental liability, terrorism, and D&O have gained more attention from clients and companies realize that selecting the right insurance partner to cover potentially catastrophic incidents is paramount to any good risk management process.
Product recalls are on the rise in Asia reflecting the eastwards shift in global supply chains and historically weaker controls in some countries. Three of the largest multi-billion dollar incidents of recent times involve manufacturers from Japan and South Korea, resulting in liability-based products seeing strong demand from clients in these markets as well as across Asia.
“Product recalls have risen steadily in the past decade. We are seeing record levels of recall activity in size and cost today,” says Alfred Shum, Regional Head of Crisis Management Asia Pacific at AGCS. “Tougher regulation and harsher penalties, the rise of large multi-national corporations and complex global supply chains, growing consumer awareness, impact of economic pressures in research and development (R&D) and production and even growth of social media are just some of the contributing factors behind this.”