SGI leads insurance market innovation
![Seoul Guarantee Insurance has paved the way with the opening a new market in Korea. [SEOUL GUARANTEE INSURANCE]](https://koreajoongangdaily.joins.com/data/photo/2023/03/14/f4e42834-0ff4-44bf-96c2-91516d87c8c4.jpg)
Seoul Guarantee Insurance has paved the way with the opening a new market in Korea. [SEOUL GUARANTEE INSURANCE]
Seoul Guarantee Insurance (SGI) continues to pioneer new insurance markets in line with the ongoing economic development of Korea.
Until 1997, mobile phones were seen as luxury items in Korea. Due to the country’s rapid economic development, competition among telecommunication businesses rapidly expanded and carriers introduced a system to sell handsets in installments.
The introduction of those new contracts meant that carriers were also seeking coverage for the risk of providing the phones while still collecting those monthly payments.
In response to this demand, SGI developed commercial credit insurance for mobile phone service charges in 1997 to provide a stable recovery plan for telecommunication charges for mobile carriers.
SGI later introduced installment credit insurance as smartphones became more common and installment plans more costly.
By enabling the creation of installment plans for mobile phones, SGI insured that the mobile communication market and Korea’s consumer electronics business could expand rapidly.
Similarly, when Korea instituted Loan to Value (LTV) regulations on the ratio for the soundness of real estate financing in the early 2000s, further insurance innovation was required.
In relation to residential mortgage loans, SGI supported home ownership for consumers by allowing them to expand the loans through mortgage credit insurance (MCI), which allows for a specified amount of a security deposit to be preferentially repaid and mortgage insurance (MI), which secures a 60 percent excess of LTV from bank mortgages.
As interest rates continued to rise in the mortgage market in the 2010s, SGI launched a product covering loans with midrange rates in July 2016 to help revitalize the real estate market and grow the credit market.
BY PARK YE-EUN [park.yeeun@joongang.co.kr]
with the Korea JoongAng Daily
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