This photo provided by Kakao Corp. shows its Pangyo office in Seongnam, Gyeonggi Province.
SEOUL, April 13 (Korea Bizwire) — South Korea’s financial regulator on Wednesday approved a digital insurance business by Kakao Corp. in a move that could heat up competition in the fledging digital insurance market.
The Financial Services Commission (FSC) made the decision, saying the operator of the country’s leading mobile messenger KakaoTalk has satisfied all criteria, including the amount of capital stock, for the launch of its non-life insurance business.
This marked the first time a newcomer in the industry has been allowed to launch a digital insurance firm.
Previously, Kyobo Life Insurance’s Kyobo Lifeplanet Life Insurance and Carrot General Insurance run by Hanwha General Insurance received the green light for digital operations.
Kakao is expected to launch the insurance business in the third quarter of this year.
The envisioned insurer will be 40 percent owned by Kakao and 60 percent by its online payment unit Kakao Pay. Both will contribute an initial capital of 100 billion won (US$81.4 million) for its launch.
Kakao’s planned foray — the latest in a series of business expansions — could further fuel competition in the digital insurance market, as Kakao can capitalize on the huge customer base of KakaoTalk, which boasts around 46.6 million local users, around 90 percent of the country’s 52 million population.
Kakao has ventured out into various business areas, including the financial sector. Internet-only KakaoBank and Kakao Pay went public last year. Concerns have also been rising that the major platform company’s entry into diverse sectors could hamper fair competition.
Shares of Kakao jumped 1.81 percent on the main bourse Wednesday in line with the benchmark KOSPI’s 1.86 percent advance.
(Yonhap)
