Industry insiders are turning their gaze towards pet insurance as the next promising market. (Image courtesy of Yonhap)
SEOUL, Feb. 15 (Korea Bizwire) – As the appeal of car insurance comparison and recommendation services wanes, industry insiders are turning their gaze towards pet insurance as the next promising market.
Amid the growing trend of value-seeking consumers in a high-cost economy, pet insurance is emerging as a new focal point for financial tech services.
Notably, Kakao Pay is gearing up to launch a pet insurance comparison service in April, with other major platforms like Naver Pay and Toss also preparing to enter the market later this year.
Major insurance companies, including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and Meritz Fire & Marine Insurance, are also expected to participate.
Kakao Pay is set to begin individual negotiations with participating companies this month, focusing on API (Application Programming Interface) agreements, followed by discussions on premium rates and commission fees next month.
A Kakao Pay representative highlighted the growing number of pet owners who view their animals as family members but noted the low awareness and subscription rate of pet insurance. The aim is to increase awareness among pet owners about the importance of insuring their pets at an early age.
The pet insurance sector has seen significant growth, with the total number of contracts from 10 insurers reaching over 100,000 by the end of October last year, a 40.7% increase from the previous year.
However, given that there are approximately 7.99 million pets in South Korea, the current insurance subscription rate stands at a mere 1.3%.
The Financial Services Commission has initiated car and health insurance comparison services, but the uptake has been minimal due to higher premiums on these platforms compared to individual insurance companies, attributed to a 3% commission fee charged by the platforms.
With annual car insurance renewals numbering around 25 million, the low transaction count through these platforms, totaling only about 3,000 in the three weeks leading up to the Lunar New Year holiday, has raised concerns about the effectiveness of these services.
In response to these challenges, Toss is actively exploring ways to reduce commission fees by negotiating additional API items with insurance companies, a move that could potentially lead to lower fees across the board for all platform-based insurance comparison services.
The Financial Services Commission is in ongoing discussions with the industry to find ways to improve these services and make them more appealing to consumers, indicating a potential shift towards more consumer-friendly practices in the near future.
M. H. Lee (mhlee@koreabizwire.com)
