Life insurers supply W6.2tr in productive finance through September

South Korea's life insurance industry channeled more than 6 trillion won ($4.49 billion) into productive sectors such as infrastructure and advanced industries through September, industry data showed Friday. The sector is also calling on financial regulators to overhaul asset management rules to sustain the expansion of long-term investment.

The Korea Life Insurance Association held a forum on productive and inclusive finance at the Grand Lotte Hotel in Seoul on Friday to review progress. In opening remarks, Korea Life Insurance Association Chairman Kim Cheol-ju said life insurers, as representative institutional investors managing long-term capital, are well positioned to provide stable funding to areas that strengthen the growth potential of the Korean economy — including advanced industries, future growth sectors and social infrastructure.

The industry supplied approximately 6.2 trillion won in productive finance through September, exceeding its nine-month interim target of 3.6 trillion won by 37 percent. The figures are measured against a five-year plan to invest 23.7 trillion won in total. The comparison excludes 1.28 trillion won in residential real estate project financing results that were not part of the original investment plan.

By sector, infrastructure — including renewable energy and highways — accounted for the largest share at 42 percent. Future advanced sectors such as data centers and advanced strategic industry fund bonds made up 16 percent, while startups and venture investment accounted for 2 percent.

The industry plans to publish a "productive finance white paper" in December documenting each company's efforts and achievements, and starting next year will release an annual productive finance report.

On the inclusive finance side, the industry has established a 15 billion won mutual aid fund to provide free insurance coverage to vulnerable groups, including small business owners, about 570,000 low-income elderly people and debt-restructuring recipients. The program is designed to continue in partnership with local governments and other bodies even after the fund's support period ends.

Regulatory reform of asset management rules was identified as a key challenge going forward. Hwang In-chang, head of the financial policy research division at the Korea Insurance Research Institute, said current rules limit insurers' ability to deploy their long-term investment capabilities, and called for a shift to an "autonomy and accountability" framework under which insurers assess and manage risks themselves and bear responsibility for the outcomes.

Specific proposals included: rationalizing subsidiary investment limits and business scope; activating overseas bond lending and improving the effectiveness of matching adjustments; expanding asset-liability management through derivatives; and allowing preemptive borrowing and supporting the development of variable annuity savings insurance products.

Kim Jin-hong, director general of the FSC's financial industry bureau, said the commission would work closely with the industry to review the regulatory reform agenda discussed Friday.

Seo Young-il, the FSS deputy governor overseeing insurance, said the life insurance sector's efforts toward productive finance must be grounded in the fundamentals of financial soundness and consumer protection.

The insurance industry announced in March a commitment to direct 40 trillion won into productive finance over the next five years, and financial authorities followed in April with a capital regulation reform plan that lowered risk coefficients for policy funds, venture and infrastructure investment. With the industry renewing its call for asset management rule changes at Friday's forum, the deregulation discussion appears to be broadening beyond capital rules to encompass investment limits, funding and asset management more broadly.