Seoul, South Korea – The Financial Supervisory Service (FSS) has initiated a comprehensive investigation into the current state of insurance enrollment among foreign residents in South Korea. This move aims to identify and dismantle barriers to insurance access for foreigners, ultimately utilizing the findings to inform and implement significant institutional improvements.
The FSS confirmed to Green Economic Newspaper on May 7th that it formally requested statistical data related to foreign insurance subscriptions from various insurance companies last month. Key information requested includes: the number of foreign policyholders and contracts from 2021 to 2024, the current status of efforts to enhance convenience for foreign insurance subscribers, and support services for foreigners such as mobile application and happy call translation services.
An FSS official stated, "This investigation into the insurance sector is a follow-up to previous initiatives, such as the expansion of foreign-friendly branches in the banking sector. Its purpose is to improve the convenience of insurance enrollment for foreigners." The official further added, "The English version of happy calls, for instance, was already discussed at the Insurance Reform Council, and this is an industry-wide effort to enhance services." The FSS has also established a dedicated task force to oversee this initiative.
The financial authorities deem a systematic investigation crucial, given the escalating number of foreign nationals residing in South Korea. According to the Ministry of Justice, the number of foreign residents in the country reached 2,650,783 in 2023, marking a 5.7% increase from the previous year. Notably, long-term foreign residents saw an 8.5% rise, totaling 2,042,017 individuals. The number of foreign workers in South Korea is also on the rise, hitting a record high of 1.01 million at the end of last year, an increase of approximately 87,000 from the prior year.
Despite the growing foreign population, insurance penetration among them remains comparatively low. Data from the Korea Insurance Development Institute (KIDI) indicates that as of 2022, only 694,000 foreigners (41.1%) were subscribed to at least one type of insurance among life insurance, long-term non-life insurance, or automobile insurance. This figure is less than half the domestic insurance subscription rate of 86.4%.
Based on the submitted data, the FSS plans to develop improved insurance systems and services for foreigners. The agency will also implement continuous monitoring and recommendations to enhance financial accessibility for foreign customers.
This FSS investigation is seen as a direct follow-up to the second Insurance Reform Council meeting held by the Financial Services Commission (FSC) in August of last year. During that meeting, the FSC discussed measures to improve convenience for foreign insurance subscribers, including providing informational materials in major foreign languages like Chinese and Vietnamese for mandatory insurance products such as accident insurance and return-to-home cost insurance for foreign workers.
Furthermore, the FSC mandated that insurance companies systemize their foreign language support personnel pools. This ensures that when customers request assistance, they can be connected for consultations. The FSC also announced plans to develop measures to prevent moral hazard, such as fraudulent disclosures related to insurance subscriptions.
At the time, the FSC also outlined plans to rationally improve insurance products for foreigners by reviewing proposals such as: developing exclusive products for foreigners, re-evaluating underwriting standards based on visa types, strengthening enrollment requirements for disease coverage, and promoting discount special provisions for providing health information.
An industry insider commented, "The low penetration of insurance among foreigners signifies a blue ocean opportunity. Many insurance companies are currently striving to enhance foreign language translation services and improve financial accessibility. The FSS investigation will be immensely helpful in accurately assessing the current situation." This concerted effort by financial regulators and the insurance industry aims to create a more inclusive and accessible financial landscape for South Korea's growing foreign resident population.
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