Kakao approved to offer non-life insurance products

Financial Services Commission Chairman Eun Sung-soo tests some of the technology of KakaoPay displayed during Korea Fintech Week, an FSC exhibition, held in Yeouido last month. [YONHAP]

The Financial Services Commission (FSC) greenlit Kakao’s move into insurance.

Its approval is preliminary, and the company needs to apply for full approval in six months. In that time, it must complete hiring and establish offices and the necessary infrastructure.

The FSC on Thursday said it approved Kakao’s application to enter the non-life insurance business as it met all of the basic initial requirements, with sufficient capital, a feasible business plan and sound management.

Kakao’s non-life insurance company has 100 billion won of capital. Kakao Pay owns 60 percent and Kakao owns 40 percent.

According to the FSC, the online-only non-life insurance company will use advanced technology and the parent company’s services to provide customized products.

Some of the products planned include insurance for groups of friends, children insurance connected to the Kakao Kids app and insurance for mobility services.

Kakao plans to utilize its machine learning and other technology for the evaluation of insurance applications.

While the financial authority has approved online insurance services previously, this is the first time a non-insurance company has been approved to start digital insurance services.

The FSC came to the conclusion that the addition of digital insurers operated by a non-insurer could have a positive impact, including an increase in competition that would benefit consumers.

“We will prepare to establish our digital non-life insurance company this year by taking steps that will help in getting full approval,” by the FSC, a Kakao Pay executive official. “We will create a new trend and build innovation through tech insurance that will protect our customers from various dangers.”

BY LEE HO-JEONG, PARK EUN-JEE [lee.hojeong@joongang.co.kr]