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Korean Insurers Shift Back To Protection Products

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NU Online News Service, July 22, 2004, 4:48 p.m. EDT

Korean life insurers are getting away from stock market volatility by emphasizing protection products.[@@]

Donovan North, an analyst in the Hong Kong office of Moody’s Investors Service, makes that point in a report on the Korean life market.

The Korean life market has gone through tough times since the East Asian Tigers Crisis of the late 1990s. Foreign insurers are doing a better job of competing with the “Big 3″ Korean life insurers and smaller Korean life insurers, North writes in the report.

In the United States, life insurers continue to shift toward investment-oriented products, away from protection-oriented products.

In Korea, life insurers face a similar combination of low rates of return on their own investments and obligations to pay high, fixed rates of return on old annuities and endowment policies sold years ago.

To cope, Korean life insurers have shifted toward whole life products, accident insurance and other products that reduce exposure to investment risks, away from annuities, endowment policies and other savings-oriented products, North writes.