Financial authorities and insurance companies in Korea are swiftly expanding services for international customers in response to the rapid growth of the foreign population, driven by an increase in the number of migrant workers.

To support this initiative, authorities are urging local insurers to produce brochures in multiple languages and to enhance their customer service teams with multilingual staff.

The decision was made during a meeting of the Financial Services Commission (FSC), the country’s top financial regulator, Aug. 8, where measures were discussed to improve insurance products in response to demographic changes, such as a low birthrate, aging population and an increasing number of foreign residents.

Both the authorities and the industry recognize the necessity to broaden their outreach to foreign residents. The number of foreign nationals residing in the country for work and other purposes has been steadily rising, yet their insurance subscription rate remains low, highlighting a substantial market opportunity.

Read More

Following the decision made during the FSC's meeting, insurance firms are focused on enhancing existing products and creating new, specialized offerings tailored for foreign customers.

They will improve guidance services for migrant workers on mandatory accident insurance and travel insurance, addressing criticism about inadequate guidance materials and consultation services. The firms plan to publish brochures in languages such as Chinese and Vietnamese and establish support teams fluent in foreign languages.

They will also introduce a system that allows for the recognition of an applicant's driving history by submitting documents like proof of overseas auto insurance, which could lead to reduced insurance premiums.

According to Statistics Korea, the number of foreign workers in the country reached 923,000 by the end of last year, an increase of about 80,000 from 2022, setting a new record. This year, the foreign workforce is expected to exceed 1 million.

The statistics agency also reported that non-Korean residents who had been in the country for three months or longer numbered 1.65 million in 2022, representing 3.2 percent of the total population of 50.02 million. This figure is projected to increase to approximately 7 percent by 2042.

In contrast, the insurance subscription rate among residents from abroad remains low. According to the Korea Insurance Development Institute, 694,000 non-Korean residents had at least one type of insurance, such as life or auto insurance, as of 2022. This results in an insurance subscription rate of 41.1 percent, which is less than half of the 86.4 percent rate among Korean nationals.

Tourists take selfies at Starfield Library at COEX, southern Seoul, July 30. Yonhap

“Given that the increase in the foreign population is an inevitable trend, efforts to develop insurance products tailored for foreigners is essential,” an official at a major insurance firm in Seoul said.

But concerns exist over possible improper sales practices, where financial institutions may fail to provide thorough explanations of product details. Domestic insurance products often feature more long-term coverage options and detailed terms compared to those abroad, making it challenging to fully communicate these aspects to residents from abroad.

Relatively short payment periods could also become a barrier to increasing insurance subscriptions among foreign customers.

While some residents from abroad may have long-term residency due to factors such as marriage to a Korean, many others return to their home countries after a short stay. Shorter insurance periods result in higher monthly premiums, making such plans less appealing to these individuals.

Regarding this, an official at another insurance firm said, “Various institutional support measures should be considered.”