Hana Financial Group launches digital insurance firm
Hana Financial Group launched its first digital insurance company, Hana Insurance, on Monday, in a bid to capitalize on the increasing demand for digital services in Korea.
The launch ceremony was held at the company's headquarters in Jongno District, central Seoul. Hana Insurance will be the first insurance company operated by the financier.
Kwon Tae-gyun, a former executive of Hana’s consumer finance affiliate, Hana Capital, will be heading the new organization, the group’s 14th subsidiary.
The group acquired The-K Non-Life Insurance, a small insurance company, in early February and received approval from the Financial Services Commission to operate the insurance company as a subsidiary. The-K Non-Life Insurance started in 2003 as an insurance company specializing in car insurance for school employees, later became a general insurance company in 2014.
The company said it will use Hana’s existing online channels and outside partners, such as mobility platforms, to provide non-life insurance programs, such as digitized car insurance, travel insurance and other specialized insurance plans.
Local insurance companies have been pushing for digitization since last year. Multiple factors, such as the growing popularity of online banking, accumulating losses from car insurance and private health insurance and the continued low interest rate made digital insurance an increasingly attractive option.
Eased regulations also had an effect. In 2018, financial regulators lowered the capital, considered the biggest entry barrier, required to open internet-only insurance companies to 20 billion won ($16 million), to increase diversity and expand the market for affordable, short-term insurance plans.
In 2013, Kyobo Life Insurance launched Kyobo Lifeplanet Life Insurance, the first life insurance company to operate entirely online. It currently partners with the messenger app Kakao to offer various insurance policies.
Then came Carrot General Insurance, an online insurance company founded by a consortium including Hanwha General Insurance, SK Telecom, Hyundai Motor and Altos Ventures. It offered non-life insurance policies such as low-cost, short-term car insurance and pet insurance.
Until last week, Kakao had been in talks with Samsung Fire & Marine Insurance to create a digital insurance joint venture. The proposal eventually fell through, but Kakao still plans to offer its own insurance policies.
As more companies shift their entire operations online, opinions differ on whether the business model will be profitable.
“Insurance programs are by nature a complicated product which is hard to standardize for online channels,” said Chang Hyo-seon, an analyst from Samsung Securities. “Most customers decide to sign up for new insurance policies based on the trust and rapport they have with their insurance planner, and people still prefer to have human-to-human contact to understand the details.”
“It is true that digitization is accelerating in the insurance business,” said one official from an insurance company. “However, the insurance business has a high entry barrier. It’s likely that we will see existing companies shift their operations online, rather than seeing more new digital insurance companies popping up.”
BY KANG JAE-EUN [firstname.lastname@example.org]