Indonesia, with insurance penetration of just 3%, beckons Korean insurers

Indonesia is emerging as a key overseas destination for South Korean insurers.

According to Indonesia's Statistics Agency, Indonesia posted an economic growth rate of 5.11 percent last year and has a population of about 284.67 million, making it the world's fourth most populous country. Yet its insurance penetration rate — measured as premium income divided by nominal GDP — has stagnated at around 3 percent, according to Indonesia's Financial Services Authority (OJK). The lower the ratio, the greater the room for market expansion.

Samsung Fire, KB Insurance, Meritz Fire, Hanwha Life Insurance and Hanwha General Insurance have all established a presence there. Samsung Fire set up a joint venture, Samsung Tugu Insurance, with local non-life insurer Tugu Pratama in 1996, while KB Insurance, which incorporated locally in 1997, operates in coordination with KB Kookmin Card and KB Capital's local subsidiaries.

Hanwha Life Insurance has been the most aggressive. After acquiring a local life insurer in 2012, Hanwha Life teamed up with Hanwha General Insurance in 2023 to acquire a 74.4 percent stake in Indonesian firm Lippo General Insurance. Lippo General was folded into Hanwha General Insurance as a subsidiary last year. Hanwha Life also bought a 40 percent stake in Nobu Bank for about 310 billion won ($232 million) last year, becoming the first Korean insurer to enter the banking business overseas. The move effectively created a local financial group spanning life insurance, non-life insurance and banking. The company plans to sell both life and non-life products through Nobu Bank's bancassurance channel to generate synergies.

Looking beyond Southeast Asia, trillion-won deals are piling up in advanced markets such as the United States and the United Kingdom. DB Insurance completed its acquisition of a 100 percent stake in US specialty insurer Fortegra for $1.65 billion at the end of May — the first acquisition of a US insurer by a Korean company and the largest M&A deal in the industry. DB Insurance, which first entered the US market through a Guam branch in 1984, has been building its overseas business around three key regions — the US, China and Southeast Asia — including purchasing stakes in Vietnamese firms VNI and BSH in 2024.

Samsung's insurance affiliates are also weighing trillion-won M&A moves. Samsung Fire has spent about 1.2 trillion won since 2019 to secure a 40 percent stake in Canopius, a Lloyd's of London specialty insurer, and booked 168.5 billion won in equity-method gains in the first half of this year alone. Industry watchers have raised the possibility of Samsung Fire acquiring the remaining stake to gain management control. Samsung Life, which made history as the first Korean insurer to go overseas when it entered Thailand in 1997, is reviewing a stake acquisition in Principal Financial Group, a US financial group specializing in retirement pensions. Both companies say nothing has been finalized. KB Insurance is also pursuing entry into the Lloyd's market.

Hyundai Marine & Fire Insurance has been writing its own half-century story in Japan. The company opened a Tokyo branch in 1976 — the first Korean non-life insurer to do so — and remains the only Korean non-life insurer operating in Japan today. Starting with sales targeting the Korean diaspora, it has since expanded its network with locally hired staff, and premium income from its Japan branch has grown thirteenfold over the past 20 years. The company held a 50th-anniversary ceremony in Tokyo on Sept. 30. Hyundai Marine & Fire Insurance operates overseas bases in eight countries, including Japan, China, the US, Singapore and Vietnam.

According to the Financial Supervisory Service, 12 Korean insurers were running 46 overseas offices across 11 countries as of the end of last year. Asia accounted for the most with 28 offices, followed by the US with 14, the UK with three and Switzerland with one. Net profit from those overseas offices totaled $197 million last year, up 23.8 percent from the previous year.