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| Corporate logos of Shinhan Financial Group and Kakao Pay. Courtesy of each firm |
By Lee Min-hyung
Competition is intensifying between Shinhan Financial Group and Kakao in the nascent digital insurance market amid sluggish growth in the conventional insurance market.
The financial holding firm launched its 16th subsidiary ― Shinhan EZ General Insurance ― on Friday. The company was formerly known as BNP Paribas Cardif General Insurance. Shinhan acquired the firm last November, and has since made drastic changes to its business strategy before the new affiliate debuted here.
The new non-life insurance arm of Shinhan is widely expected to compete fiercely with Kakao Pay's digital insurance subsidiary, Kakao Pay Insurance, which will start its business sometime in the third quarter of this year.
Both companies are set to focus on selling non-life insurance products online. The new Shinhan affiliate started sales of its first product, which repays subscribers' remaining car loans in case of death or due to suffering from stress disorders after a car accident.
Shinhan EZ General Insurance plans to widen its product portfolio, which is closely linked with people's daily lives.
"We are going to cause a sensation across the insurance industry by launching a series of fresh insurance products with the help of startups," a Shinhan official said.
Shinhan's biggest rival in the digital insurance market is Kakao Pay Insurance because the Kakao affiliate's mobile expertise is very strong here. Kakao is the operator of the nation's dominant instant messaging app and is widely considered Korea's dominant mobile platform operator.
Kakao Pay Insurance adopted a strategy of catching the attention of as many retail customers as possible in the early phase of its business by launching trendy yet cheap digital insurance products. They include insurance for mobile phones, pets and tours.
The big tech firm comes as a potentially big competitor to Shinhan due to Kakao's strategy of creating synergies with its financial affiliates such as KakaoBank and Kakao Pay Securities.
Both companies are expected to attract as many subscribers as possible in the early stage of their businesses, as digital insurance products do not guarantee huge returns under the current business model due to the cheap sales price. However, they consider seeking new business models, depending on how fast they grow in size.
"The digital insurance market is a fresh revenue area at a time when the conventional insurance market is facing a growth slowdown due to saturation," an industry source said. "Even if it remains to be seen how lucrative the digital insurance market will be, financial firms or existing insurers need to constantly find new growth areas amid a toughening rivalry in conventional insurance businesses."
