Kakao enters insurance sector for synergy with its online platforms

Kakao Corp.’s ambition to become an insurer is gradually becoming a reality.

The platform giant’s application to start an insurance business has received preliminary approval from the country’s regulator Financial Services Commission (FSC) on June 10.

Kakao’s insurance business, set to launch in early 2022 according to its plan, will focus on domestic traveler’s insurance and mobility-related insurance options to create synergy with its current taxi, bicycle and designated driver services.

Other offerings will include self-designed insurance products, children’s insurance, property insurance such as for mobile phone damages as well as group insurance programs for various social clubs and activities.

The insurer will be 40% owned by Kakao and 60% by its fintech unit Kakao Pay. Kakao and Kakao Pay will together contribute an initial capital of 100 billion won ($90 million) to set up the insurance company.

The new entity will legally be categorized as a digital insurer, which must sell more than 90% of its insurance policies and make at least 90% of its insurance premium income through contactless methods such as phone, mail or internet.

According to the FSC, this approval marks the country’s first case where a company outside the insurance sector is given the license to run the digital insurance business.

Other digital insurers in Korea include Kyobo Life Insurance Co.’s Kyobo Lifeplanet Life Insurance and Hanwha General Insurance Co.’s Carrot General Insurance.

The new entity will be led by Kakao Pay’s current head of insurance business task force, Choi Sae-hoon. Choi was formerly the CEO of Daum Communication Corp., where he led the launch of an auto insurance service that was later acquired by BNP Paribas in 2014.

“We have been making big progress in recruiting new talents and working on the ways to link our existing platforms with the new business. We will get the FSC’s final authorization within the next six months and launch early next year,” said a Kakao Pay representative.

Write to Ho-gi Lee at hglee@hankyung.com
Daniel Cho edited this article.