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| Gettyimagesbank |
Non-life insurance firms in South Korea should explore ways to seek business opportunities with their North Korean counterparts, as the isolationist regime is showing growing signs of embracing an open market economy, an expert said Sunday.
In a paper published by the Korea Institute of Finance (KIF), its author Park Hae-sik said the non-life insurance industry in the North would be a market with great potential for growth if international sanctions on North Korea are lifted.
"Considering the possibility that North Korea can have its economy open and see the market economy set in at a rapid pace, the country has much room for growth. Local firms should seek measures to capitalize on the rare opportunity for growth," he said.
The remarks were made in response to the establishment of insurance and reinsurance firms between August 2016 and October 2017, which is seen as a gradual yet firm move by North Korea toward an open market economy.
It set up Polestar Insurance Company, specializing in coverage against fire damage, technology, agriculture and trust in August 2016, and Samhae Insurance Company that covers marine and aviation insurance, two months later in October.
In October 2017, it set up Future Re Company, the first-ever reinsurance firm there.
Also known as insurance for insurers or stop-loss insurance, reinsurance refers to a practice of insurers transferring portions of risk portfolios to other insurers to reduce the likelihood of paying a large obligation resulting from an insurance claim.
In addition to introducing the more sophisticated, advanced form of business risk management, the firm stated on its website that it seeks business partners in "both domestic and international markets."
These are, according to experts, indications that North Korea was moving to create an environment conducive to foreign investment and global trade.
They said the country is in growing need of implementing insurance against unforeseeable yet possible losses to ensure stable business operation amid an increasing number of new private companies there over the past few years.
