I. Greeting

 

Good morning

ladies and gentlemen,

Welcome to Seoul.

Let me thank

President 마이클 모리세이

and Chairman 노만 소렌슨 of

the International Insurance Society (IIS)

for this wonderful event.

I also want to thank

Chairman 김규복 of

the Korea Life Insurance Association,

and Chairman 문재우 of

the General Insurance Association of Korea

for the excellent organization.

Distinguished guests,

The IIS is honored as a leading industry forum.

Insurance leaders come to

study trends, exchange ideas,

and shape the future.

Seoul is not new to this.

In 1987, it held

the 23rd IIS Annual Seminar.

At the time,

Korea’s insurance industry was

just beginning to open its doors

to the world.

This time around,

the insurance industry is ready to go global.

It is ready to share experience.

Today's Annual Seminar will mark

a new chapter of Korea's insurance industry.

 

 

II. Korean Economy and Insurance Industry

 

Ladies and gentlemen,

Korea is a remarkable success story.

It is the first country in history

to go from an aid recipient

to a donor country.

The insurance industry was

a major part of the story.

First, insurers supported

economic activities in all sectors―

by providing insurance

for incidental losses.

Second, capital from insurance

was channelled to the real economy―

through bond investments and loans.

Last but not least,

the insurance industry created

more quality jobs.

The industry itself

grew dramatically in the course.

From 1987 to 2012,

its total assets jumped 36 times

from 18 billion US dollars

to 650 billion US dollars.

But—I am not here to

highlight the accomplishments.

I want to shed light on the challenges—

and talk about the future.

 

 

III. Challenges and Future

 

Let me start with—the challenges.

Korea’s insurers are facing new challenges—

both externally and internally.

On the external front,

global economic recovery remains weak.

Countries have less policy room,

due to accommodative policies.

Small open economies like Korea

are exposed to external conditions.

On the internal front,

population is rapidly aging.

Potential growth is slowing.

Concerns of a “low-growth era”

are mounting.

 

Meanwhile, consumer protection is

becoming more important.

 

In this context,

the insurance industry needs to

find a new paradigm for growth.

 

The paradigm that it used during

high interest rates and strong growth

will not work anymore.

This challenge is not unique to Korea.

It is a challenge shared by all insurers

across the world.

That brings me to—the future.

 

How the insurance industry should

respond to the different trends?

 

More importantly,

how it can turn new challenges

into new opportunities?

 

Let me talk about this

on a trend-by-trend basis.

 

First trend:

low growth and low interest rates.

 

This environment will cause changes

in the overall financial industry—

especially the insurance industry.

 

The insurance industry is easily influenced

by growth rates and interest rates.

 

For example, bond investments,

which account for a major share

of insurance asset management,

are highly exposed to

interest rate fluctuations.

So, the insurance industry needs to

take preemptive action.

Insurers should improve balance sheets

through Reserve accumulation

and risk management.

But efforts should not stop there.

The insurance industry needs to

explore the so-called “white space.”

The starting point is the basics.

This means―insurers should

sharpen their competitive edge by:

enhancing underwriting capacity,

developing new insurance products,

and improving asset management ability.

Second trend:

aging society.

 

Some say,

the world will soon enter

the “Homo Hundred” era.

 

In Korea,

this is quickly becoming a reality.

 

Life expectancy is rising,

while fertility rate remains low.

 

This trend will definitely bring challenges.

 

But it will also mean opportunities

for the insurance industry.

 

Higher life expectancy means

more years in retirement.

 

And people do not want to

simply “live longer.”

They want to “live longer

in good health and happiness.”

So there is a growing demand for

pension and health care insurance.

Therefore,

insurers must come up with

a wide range of new products

for the aging population.

Fortune favors the prepared.

By preparing for the aged society,

insurers can fully take advantage of

the emerging demand.

They can also fulfill

their social responsibility.

Third and final trend:

consumer protection.

Weak consumer protection will

result in low consumer confidence.

 

And low consumer confidence will

severely impact the financial industry.

 

This was well demonstrated by

the worldwide “Occupy” movement.

 

Consumer protection is particularly

important for the insurance industry.

 

Insurances are guarantees

for 10 to 20 years.

So, interactions with consumers

should go from one-way to two-way.

Protecting consumers, such as

preventing incomplete sales,

will not be enough.

Insurers must listen to consumers

and actively reflect their views

in the products and services.

 

 

IV. Closing

 

Ladies and gentlemen,

 

In times of uncertainty,

it is hard to prepare for the future.

 

But we should remember—

every cloud of uncertainty offers

a silver lining of opportunity.

 

Winston Churchill once said,

“The pessimist sees the difficulty in every opportunity,

the optimist sees the opportunity in every difficulty.”

 

I choose to be an optimist.

 

If we identify trends and “ride” them,

the opportunities will outweigh

the challenges.

 

I think this year’s seminar,

“Future of Insurance: Reshaping the Industry

to Capitalize on Global Trends,”

is very timely.

After you discuss the global trends,

please experience the cultural trends of Korea.

See the Korean culture with your eyes.

Feel the Korean Wave with your heart.

Then, you will truly appreciate 강남 스타일.

Thank you.