Will the Car Insurance Market Change... Insurance Companies in a Standoff Over Comparison and Recommendation Services

Standard API Finally Adopted... January Launch in Sight
Price Policies Diverge Between Large and Small-Medium Companies
Without Recommendation Accuracy and Price Competitiveness, Could End Up Like 'BoheomDamoa'

As the differences in positions between insurance companies and fintech firms regarding the method of information provision are being reconciled, an insurance comparison and recommendation platform is expected to launch as early as the beginning of next year. Since pricing policies are expected to vary depending on the size of the insurance companies, attention is focused on whether the landscape of the automobile insurance market, dominated by large insurers, will change.

According to industry sources on the 3rd, insurance companies and the fintech industry have agreed to introduce a 'standard Application Programming Interface (API)' for the insurance comparison and recommendation platform. Accordingly, from January next year, it is expected that insurance products such as automobile insurance and indemnity health insurance can be compared and purchased on the platform.

An API is a standard for exchanging various data. For the insurance comparison and recommendation platform to operate, platform operators and insurance companies must agree on which type of API to use. Fintech companies operating the platform demanded APIs specific to each insurance company, but the insurers insisted on a standard (unified) API. This is because without a unified standard, development time and costs increase to accommodate the information requirements of each company. On the other hand, fintech companies opposed this, arguing that standardized information makes it difficult to provide customized recommendations.

As a result, with mediation from the Financial Services Commission, the standard API was ultimately accepted, enabling the launch of the comparison and recommendation platform. The Life Insurance Association, the General Insurance Association, and the Korea Fintech Industry Association agreed to prepare standard API specifications through discussions on data standardization necessary for comparison and recommendation services.

Although preparations for the launch have been completed, the calculations among insurance companies differ. First, large insurers are reportedly planning to price automobile insurance sold on the platform higher than the insurance products sold on their own websites. This is because they have to pay up to 4.9% commission to the platform operators, making it inevitable to raise premiums. An industry official explained, "Since automobile insurance premiums of large general insurers are often cheaper than those of small and medium-sized insurers, large companies will not bear a significant burden. Rather, small and medium-sized insurers will have to lower prices and compete by sacrificing profits."

Small and medium-sized insurers, however, see this as an opportunity and plan to actively participate. Since the market share of the 'Big 4' general insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and DB Insurance?accounts for 85.2% (as of the first half of this year), they believe that to create cracks in this landscape, they must secure market share even if it means sacrificing some profits. In particular, digital general insurers are expected to actively engage. Carrot General Insurance's market share rose from 1.3% at the end of last year to 1.6% in the first half of this year.

However, there are concerns that the platform's purpose could be undermined by the actions of large general insurers. If the accuracy of the comparison and recommendation service declines, consumers may prefer to sign up through the cheaper websites of large insurers rather than the comparison and recommendation platform. An industry official said, "The insurance comparison platform 'Boheom Damoa,' which was launched as an 'insurance supermarket' by financial authorities, has long been defunct," adding, "Authorities should guide insurers to actively participate in the platform so that insurance consumers can benefit and use it effectively."