Kakao Corp., one of South Korea’s leading online platform operators, shared that it plans to enter the insurance industry. South Korea’s Financial Services Commission (FSC) granted preliminary approval to Kakao’s application to establish a digital non-life insurance platform.
The country’s regulator favored Kakao’s insurance industry entry after seeing that it met initial basic requirements, such as ample capital, constructive business plan, and sensible management. Notably, the Kakao approval marks South Korea’s first-ever case where the FSC licensed a non-insurance company’s insurance sector venture.
Kakao’s non-life insurance platform currently holds a 100 billion won ($90 million) capital. KakaoPay, Kakao’s fintech arm, would also own 60% of the upcoming service, while Kakao would hold the remaining 40%.
Launching a Digital Insurer
Now that it has received the FSC’s preliminary approval, Kakao seeks to earn full approval in six months. During that period, Kakao would finalize hiring, set up workspaces, and provide necessary infrastructures.
Around early 2022, Kakao would launch its online-only insurance business, which would mainly undertake domestic traveler and mobility service insurance. According to the FSC, Kakao’s online-only insurance unit would also utilize advanced technologies to deliver customized, user-oriented products and services.
As a digital insurer, the new Kakao platform would have to sell over 90% of its insurance policies. The unit would also generate 90% of its premium income using non-face-to-face technologies, including smartphones and the Internet.
Some of the platform’s planned offers include property insurance, mobile phone damage insurance, and child insurance. Moreover, Kakao would link the new child insurance to Kakao Kids, an interactive educational app. Kakao would also provide group insurance packages for various social activities and clubs.
Creating Synergy with Other Platforms
Furthermore, Choi Sae-Hoon, the current Kakao Pay Insurance Business Task Force Head, would be leading the new Kakao unit. Besides diversifying Kakao’s platform portfolio, the upcoming digital insurer would create synergies with its parent company’s existing services. Kakao had recently been collaborating with new talents in incorporating the new service into its business operations.
A company official also stated that Kakao plans to create new trends and continue building innovations through tech insurance. Additionally, Kakao aims to develop products connected to other services offered by Kakao affiliates to meet the fast-changing consumer needs.
For instance, Kakao would enter the domestic e-commerce sector by launching a new platform in July, challenging local e-commerce companies. Kakao’s new e-commerce platform also aims to give smaller businesses more control over their digital businesses.
