The South Korean insurance industry is expected to face greater challenges in 2026, amid slowing growth and mounting pressures on profitability and financial soundness, according to an outlook published by the Korea Insurance Newspaper in collaboration with the Insurance Research Institute. The report says the overall industry is likely to soften, with initial premiums expected to decline slightly on a year-on-year basis.
Life insurance is expected to contract due to weaker sales of savings-type products, while non-life insurance may see only modest growth, supported mainly by disease and accident coverage. Despite this, growth in long-term non-life insurance is also projected to slow, making it difficult for insurers to rely on top-line expansion as they have in the past. The industry’s overall premium growth rate in 2026 is forecast to remain in the low 2% range, with life insurance rising around 1% and non-life insurance in the mid-3% range. Even with a continued shift toward protection-oriented products, insurers face limited room to expand their customer base or increase premiums.
Profitability is also expected to face pressures, with growth in contractual service margin (CSM) likely to decelerate, widening performance gaps among insurers. Life insurance CSM may stagnate or edge down after 2026, while non-life CSM is expected to continue growing, but at a slower pace. Financial soundness is similarly under strain. Solvency indicators such as the K-ICS ratio are expected to remain flat or decline slightly from 2025 levels, making Tier 1 capital management increasingly important. Variations in insurers’ ability to manage capital requirements and improve capital quality are likely to widen disparities in soundness, prompting a need for more integrated management approaches that balance profitability and solvency.
The report also emphasizes the need for insurers to align strategies with new government policy directions. These include deeper and more systematic use of AI across core operations, a clearer role in transition and productive finance, and greater participation in addressing challenges posed by an aging population. By strengthening asset-liability management, improving cost efficiency through digital transformation, and developing new products linked to climate risk, healthcare, and long-term investment, insurers can turn these policy shifts into opportunities for sustainable, long-term growth—even in a more constrained operating environment.