Korean insurers protest tech giants’ expansion into industry

Insurers in South Korea have ramped up their protest following the Financial Service Commission’s decision to allow tech giants such as Kakao, Naver, and Toss to start insurance comparison services via their online platforms.

The regulator’s decision would allow online platform operators to launch a new service comparing and recommending insurance products to users. “Traditional” insurers have protested the move since its announcement, staging a rally in front of a presidential office in Yongsan District, Seoul earlier this week and calling on President Yoon Suk-yeol to stop online platform giants from expanding their business into the insurance sector.

Many insurers feared the decision would pave the way for these social media giants to enter and dominate the industry at a time when the domestic insurance market was already saturated, The Korea Times reported. Allowing tech giants into the industry could result in the displacement of hundreds of thousands of insurance salespeople, Korea’s Insurance Agency Association said.

According to The Korea Bizwire, representatives from the Insurance Agency Association also believed that online platform providers could bypass regulatory requirements and levy additional costs for the use of their widely-known platforms, ultimately harming consumers.

“When the big tech firms start such services, chances are that overall insurance prices will rise, as they are widely expected to shift part of their service operation costs to customers in the end,” an industry source was quoted as saying.

Sources from the fintech industry have argued that the decision could only benefit customers, helping them understand insurance products better. “Even if concerns over the possible insurance rate hikes remain in place, [tech giants’] expansion into insurance will diversify the options customers can choose from,” one said to The Korea Times.