Variable life and pet insurance see surge in demand

(Yonhap)

South Korea’s insurance industry is undergoing a significant shift as booming stock markets and falling interest rates drive a surge in demand for variable life insurance, while pet insurance emerges as a fast-growing niche in the property and casualty sector.

According to data from the KOREA Life Insurance Association released on Wednesday, initial premiums for variable insurance products hit 1.07 trillion won ($779 million) in the first four months of 2025, nearly double the 548.5 billion won recorded during the same period in 2024. In contrast, initial premiums for general life insurance products, such as whole life policies, declined by 10 percent to 6.04 trillion won.

Variable life insurance differs from traditional products by incorporating investment components. Policyholders choose among various stock, bond, or mixed funds, with returns tied to market performance. Despite the risk of losing principal, the products are increasingly favored by younger investors seeking higher yields amid today’s bullish KOSPI benchmark and declining market interest rates.

Major insurers, including Mirae Asset Life Insurance Co., MetLife Insurance Co. of Korea, and KB Life Insurance, are tapping into the trend. Mirae Asset Life Insurance has attracted attention by offering customizable product structures tailored to individual risk profiles.

Meanwhile, property and casualty insurers are exploring new growth avenues as traditional markets become saturated, with pet insurance emerging as a key opportunity to target pet owners.

Data from nine insurers - including Hyundai Marine & Fire Insurance Co. and Carrot General Insurance Co. - show that pet insurance contracts nearly doubled to 196,196 by the end of May 2025, up from 119,837 a year earlier. New contracts rose 65 percent year-on-year to 54,408 in the first five months of 2025, while total premiums surged 72 percent to 46.9 billion won.

Insurers are now competing by expanding coverage. Some offer discounts for multi-pet households, while others provide benefits for treatments such as MRI scans.