Image of 2026 insurance industry tasks created by Chat GPT./Image created by Chat GPT
‘Capital’ rather than ‘growth’ is chosen as the keyword for the insurance industry next year. As the growth rate decreases and capital capacity becomes more sensitive to falling interest rates and risk indicators, the industry’s top priorities are focused on protecting profitability and managing required capital.
According to the insurance industry on the 13th, the Insurance Research Institute presented the overall insurance premium growth rate for 2026 at 2.3% (about 265 trillion won). Life insurance only increased by 1.0%, and non-life insurance increased by 3.5%. The portfolio continues to show ‘slow growth’ focused on protection and long-term growth. Although the number increases, the decision to make money changes to a defensive one.
The pressure on the capital side is clearer. The Insurance Research Institute predicted that the solvency ratio (K-ICS) will decline slightly next year and that if the interest rate falls by 100bp (1bp = 0.01% point), the sensitivity of -12.5%p for life insurance and -9.1%p for non-life insurance was observed. The need for management also increases with scenario bands of 160-181% for life insurance and 171-200% for non-life insurance. The ‘paradox of interest rate cuts’, in which bond prices may rise but capital may become thin, is expected to be the starting point for capital management next year.
The Korea Institute of Finance also shares the same direction. Pointing out that small and medium-sized companies and those applying transitional measures are highly vulnerable during periods of falling interest rates, it was recommended to regularly implement capital management tools such as joint reinsurance. Furthermore, as the importance of regulation centered on basic capital increases, the message is that the capital structure itself must be redesigned to be ‘sustainable’.
The profitability standards on site have also become harsher. For non-life insurance, insurance profits and losses in the first half of 2025 decreased sharply compared to the previous year, and for CSM, there was only a slight increase. As fluctuations in net loss ratios and loss ratios increase, there is growing pressure to thicken the ‘capital defense line’ with required capital, asset liability management (ALM), and hedging.
Macro-policy variables also support the ‘defend profitability’ stance. In 2026, the domestic and overseas economy is expected to continue to experience low growth, low interest rates, and uncertainty amid a gradual downward trend, and the extent of interest rate decline is expected to be limited. In this environment, ‘capital quality’ and ‘risk elasticity’ determine corporate value rather than ‘growth speed’.
On the sales side, channel reset heralds a mid- to long-term game chain. System changes such as 7-year fee classification, comparative disclosure, and strengthening GA regulations are aimed at limiting short-term shocks while changing sales inertia with a focus on retention rate and quality. Companies that are more dependent on independent corporate agencies (GAs) need to preemptively manage the risk of slowing down and losing new contracts.
Another problem in the operating environment is foreign exchange hedging costs. As won and dollar volatility increases, hedging costs for foreign currency assets (total of 158 trillion won in life and non-life) continue to put pressure on profitability. Small and medium-sized companies that are highly dependent on short-term swaps may be particularly hit hard.
The Insurance Research Institute predicted, “The solvency ratio (K-ICS) is expected to decline slightly in 2026,” and added, “With a gradual decline in interest rates expected, the importance of managing required capital will increase.”
