(Tax and Finance News = Reporter Bang Young-seok) The insurance industry was unable to overcome the aftermath of bad news such as a cut in the Bank of Korea’s standard interest rate, and adjusted the disclosed interest rate down even in the new year.
The Bank of Korea lowered the benchmark interest rate twice for one year only by holding the Financial Monetary Committee on October 16, presided over by Governor Lee Ju-yeol, and lowering the base rate to 1.25% per year in July and October last year.
In the case of savings insurance, which is highly likely to generate negative margins, 12 insurance companies have stopped selling products, and in the non-life insurance industry, all seven insurance companies have decided to stop selling them.
As the spread of Corona 19 overlapped with the low interest rate, face-to-face business activities were severely reduced, so it is expected that the downtrend of the published interest rate in the insurance industry will not rebound in the future.
According to the insurance industry on the 5th, the average public interest rate for savings-type insurance in January in the first year of the life insurance industry was 2.22%, down 0.14 points from the previous year.
Among the 10 life insurers that sold savings insurance during this period, life insurers with a reduced public interest rate also ▲ NH Nonghyup Life Insurance (2.20%. -0.03 points), ▲ Hanwha Life Insurance (2.17%, -0.05 points), ▲ ABL Life Insurance (2.15%,- 0.06 points) ▲ Kyobo Life Planet (2.30%, -0.10 points) reached 4 companies.
However, four companies, including Samsung Life Insurance (2.30%, 0.03 points), Kyobo Life Insurance (2.27%, 0.03 points), Tong Yang Life Insurance (2.25%, 0.02 points), and Heungkuk Life Insurance (2.27%, 0.03 points), slightly lower the public interest rate. As it was raised, the decline in the average public interest rate decreased.
Orange Life Life Insurance maintained the stated interest rate for savings insurance at 2.15%, the only one that did not change the stated interest rate for savings insurance.
However, as one-third of all life insurers stopped selling their savings insurance products themselves, the types of savings insurance that can be subscribed through the banca channel declined over time.
Among 15 life insurers as of January, five life insurers, including Mirae Asset Life Insurance and Hana Life Insurance, DGB Life Insurance, Shinhan Life Insurance, and Fubon Hyundai Life Insurance, stopped selling savings insurance.
The situation in the non-life insurance industry was even worse. As of January, sales of savings-type insurance products disappeared as all seven insurance companies stopped selling.
Insurance companies that have stopped selling savings insurance through the Bancassurance channel as of January are ▲ Nonghyup Insurance ▲ Hyundai Marine Insurance ▲ Samsung Fire Insurance ▲ KB Insurance ▲ DB Insurance ▲ Heungkuk Fire Insurance ▲ Hanwha Sonda.
The published interest rate is a kind of insurance plan rate that is applied in conjunction with the market interest rate. If the disclosed interest rate falls, the maturity refund amount decreases and the insurance premium rises.
The fact that the public interest rate decreases as interest rates fall means that the amount of refund available to consumers to pay insurance premiums decreases, which means that savings insurance investment incentives decrease.
Insurers, whose expected profits decline over time due to the introduction of IFRS17 and low fertility and low interest rates, which focus on evaluating the market price of debt, have decided that it is difficult to continue selling products with a negative margin’bomb’. That’s it.
An official in the insurance industry said, “It is extremely unlikely that the standard rate will recover in a slow economic recovery. If you hold it for more than 10 years, it still maintains high interest rates compared to insurance benefits and bank rates. From the standpoint of Hana insurance companies, the prevailing judgment is that continuing product sales is a long-term loss.”
[조세금융신문(tfmedia.co.kr), 무단전재 및 재배포 금지]