Kakao Sonbo Preliminary Approval Granted... First Big Tech Entry into Insurance Industry Case

Application for Main Approval Within 6 Months

[Asia Economy Reporter Park Sun-mi] The preliminary approval of Kakao Insurance's insurance business has turned on a green light for big tech companies (large information and communication companies) to enter the insurance industry. This is the first case where a new business operator, not an existing insurer, has received preliminary approval as a telemarketing-specialized insurance company.

According to financial authorities on the 10th, the Financial Services Commission granted preliminary approval for Kakao Insurance to operate an insurance business at its 11th regular meeting held the day before. It has been six months since Kakao Pay applied for preliminary approval to establish Kakao Insurance with the Financial Services Commission on December 29 last year.

Based on the Financial Supervisory Service's review results regarding the licensing requirements under the Insurance Business Act, the Financial Services Commission judged that Kakao Insurance meets all requirements including capital requirements, business plan feasibility, and sound management conditions. Furthermore, it was assessed that Kakao Insurance could contribute to enhancing consumer benefits and promoting competition and innovation in the insurance industry through insurance services linked with Kakao Group's digital technology and platform.

Going forward, Kakao Insurance can apply for full approval from the Financial Services Commission after fulfilling the licensing requirements such as capital investment, hiring personnel, and establishing physical facilities within six months. This means that full-scale insurance business operations could begin as early as the end of this year or by the first half of next year at the latest.

Kakao Insurance is expected to actively utilize the Kakao platform while pursuing a strategy to aggressively target niche insurance markets. In its business plan, Kakao Insurance stated that it plans to focus on developing products that can address coverage blind spots in daily life, such as DIY insurance involving consumer participation and platform-linked insurance.

Additionally, it plans to enhance convenience in subscription and claims through easy sign-up via KakaoTalk and Kakao Pay, simple claims processing through the platform, and rapid insurance payment review using artificial intelligence (AI). It also intends to strengthen consumer protection by providing consultation and explanation services using the Kakao platform and responding to consumer complaints 24/7 through AI chatbots.

A financial authority official commented on the preliminary approval, saying, "It is expected to have a positive effect on revitalizing the general non-life insurance market, which was judged as a 'concentrated market' requiring competition promotion in the insurance industry competition evaluation conducted last February."