Samsung Fire & Marine halts bancassurance after 20 years: Report

The FSC reports a 15% decline in bancassurance income for Korean non-life insurers.

Samsung Fire & Marine Insurance stopped offering bancassurance services after more than two decades, reported the Korea Times.

Effective 1 April, Samsung Fire & Marine Insurance stopped new sales of its long-term insurance products through banks.

However, existing agreements with banks will be maintained, and oversight of previously sold products will continue. The company also plans to explore sales opportunities in international markets like Vietnam while monitoring industry developments.

READ MORE: Samsung Fire & Marine Insurance ends bancassurance business

Pension and savings-based insurance policies, which represent over 70% of bancassurance sales, have declined due to the adoption of the new International Financial Reporting Standard (IFRS) 17.

This standard encourages insurers to prioritise protection-based insurance, enhancing profitability indicators like service margin. Consequently, the appeal of bancassurance, which relies heavily on savings-based products and pays commissions to banks, has diminished.

Meritz Fire & Marine Insurance and Heungkuk Fire & Marine Insurance have already ceased bancassurance services. 

ALSO READ: Long-term insurance drives Samsung Fire & Marine’s 2023 profit growth

Whilst companies like Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance still offer bancassurance, internal discussions suggest potential reconsiderations of their positions.

Income from bancassurance for Korean non-life insurers dropped by 15%, from 6.2t won ($4.5b) in 2018, according to the Financial Supervisory Service.

The withdrawal of non-life insurers from bancassurance poses challenges for banks in complying with regulations limiting the sale of any single insurer's products to 25% of total insurance sales. 

These regulations aim to foster a competitive and fair market by preventing preferential promotion of products from insurers affiliated with a bank's financial group.