Eun Sung-soo, chairman of the Financial Services Commission (FSC), Chung Hee-soo, chairman of the Korea Life Insurance Association, Chung Ji-won, chairman of the General Insurance Association of Korea and presidents of insurance companies hold the ESG Management Declaration Ceremony in order to enhance trust in the insurance industry and the growth of the insurance industry at the Westin Chosun Hotel in Seoul on February 23. (Photo: FSC)

Presidents of Korean insurance companies have declared ESG management to enhance trust in the insurance industry and the insurance industry's sustainable growth and began to adapt to a new management environment in a ceremony on Feb. 23.

The ceremony was held with representatives of 37 life and non-life insurance companies and the heads of the Korea Life Insurance Association and the General Insurance Association of Korea.

Eun Sung-soo, chairman of the Financial Services Commission (FSC), suggested a direction for the government and insurers in pursuing sustainable growth in the insurance industry in a congratulatory speech.

“Low growth, low interest rates and the aging trend are hampering the growth of the Korean insurance industry and undermining its profitability,” chairman Eun said in a speech.

“To make matters worse, the Korean insurance industry is facing an unprecedented crisis sparked off by COVID-19.

However the Korean insurance industry is rapidly converging and developing while trying to overcome the crisis by accelerating digital transformation and introducing small short-term insurance policies.

“To overcome current difficulties and promote sustainable growth, the Korean government is implementing a package program which will cost 175-plus trillion won along with the financial sector and plans to normalize financial countermeasures after the COVID-19 crisis,” Eun said.

“The insurance industry needs to adjust its status and roles as the COVID-19 situation has been compelling people to have more interest in health, safety and retirement lives.”

ESG management is emerging as a new opportunity for the insurance industry. In a globalized society, ESG serves as an international norm and a vital part of management.

Good examples of this change are the UN's signing of the 2030 Goals for Sustainable Growth and the Paris Agreement.

“The government has already prepared a blueprint for making Korea a leading country in ESG management including the 2050 Carbon Neutrality Declaration and Green New Deal policies for ESG management,” Eun said.

“The insurance industry is closely related to ESG due to the characteristics of products and long-term investment.”

Changes in climate, environmental and social factors are expected to serve as a new growth engine for the insurance industry.

In this sense, the insurance industry is optimized for long-term projects such as the Green New Deal according to Eun.

To this end, the government plans to gradually introduce the ESG disclosure system, adjust the investment risk coefficient for the Green New Deal project, support ESG investment, and reflect ESG management and investment efforts as incentives for management assessment.

Meanwhile, Eun also stressed the insurance industry’s roles as a risk guarantor, an ESG management promoter, and a practicing entity in spreading ESG.

Finally, Eun wrapped up his message by suggesting several directions for the Korean insurance industry, saying that these roles of the insurance industry will be demanded by society and serve as a new opportunity for the insurance industry to promote its growth and boost its profitability and reliability.

“We need to bring innovation to the system and practices so that consumers can easily and safely purchase reliable products to change the supplier-oriented insurance industry structure to a consumer-centered one and make continuous efforts to develop insurance policies against diverse new risks and get rid of areas which cannot be covered by insurance,” Eun said.

Chung Hee-soo, chairman of the Korea Life Insurance Association, suggested that Korean insurance industry make endeavors for the diffusion of ESG management, saying that ESG management which seeks sustainable management from a long-term perspective mixes well with the insurance industry, which is a long-term industry.

“A paradigm shift in corporate management is ushering in a triple bottom line era that seeks social and environmental value,” Chung added.

“The Korean insurance industry needs to participate in ESG management and steadily implement it.”