Kakao Pay's pet insurance comparison and recommendation service / Courtesy of Kakao Pay
Digital-based comparison and recommendation services in travel insurance and pet insurance products have made their debut in Naver Pay and Kakao Pay, respectively, but skepticism is arising about the effectiveness of these services due to the absence of key players.
On Friday, Naver Pay launched the travel insurance comparison and recommendation service, with six insurers including Hanwha General Insurance and Lotte Insurance. However, Kakao Pay Insurance, which has maintained the industry's No. 1 position, and other major companies such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance and KB Insurance did not participate.
On the same day, the mobile payment subsidiary of IT conglomerate Kakao also launched the pet insurance comparison and recommendation service with three insurers: Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance and KB Insurance.
The top two players in the market — Meritz Fire & Marine Insurance and DB Insurance — as well as small- and medium-sized insurers were not on the list.
The two fintech firms operating the platforms for the services failed to attract major players for different reasons.
Naver Pay and insurers engaged in disputes as the latter did not accept what they claimed was an exorbitant level of commission — about 9 percent of insurance premiums — suggested by the former.
“If we accept that suggestion, it will inevitably lead to hikes in insurance premiums and cause damage to consumers,” an official from one of the major insurers in Seoul said.
On the other hand, insurers, which did not participate in Kakao Pay's pet insurance comparison and recommendation service, cited the need to improve their products to become more competitive.
DB Insurance and Meritz Fire & Marine Insurance plan to participate within this month and the third quarter of the year, respectively.
“Our product improvement work is scheduled for the third quarter, so we decided to participate after this work is done, as changes in the product require another development of the system to be suitable for the comparison and recommendation service,” a Meritz official said.
Industry officials noted that the insurers may have seen the growing need to enhance their pet insurance products as almost all products currently available in the market offer similar coverage, which means the comparison service would not mean much to consumers.
A sign for the Financial Services Commission at Government Complex Seoul / Korea Times file
Insufficient participation among players in the latest insurance comparison and recommendation services are leading to concerns that the Financial Services Commission's (FSC) efforts to promote such services with the aim to boost the growth of the local insurance market could be shunned by more consumers.
In January, seven fintech companies launched the car insurance comparison and recommendation service, which was the first to be implemented under such initiatives of the financial authorities.
Despite receiving full support from the country's top financial regulator, this service has not been well received by consumers, as the commission paid by insurers to platform operators led to higher insurance premiums, compared to the prices for contracts signed through direct channels.
For the five months since the service launched, 490,000 users visited the platforms but among them, only one in 10 signed contracts.
“We need to wait and see how the situation develops as the services are still in their beginning stage,” an FSC official said.