South Korea's major insurance companies raised policy loan interest rates to the 4% range in June as stock market-driven debt investment increased borrowing demand. The Big 5 non-life insurers recorded an average rate of 3.96% in June, up 1.6 percentage points from January, while the Big 5 life insurers' rate reached 4.33% last month, rising 0.06 percentage points. Despite the increases, policy loan rates remain more than 1 percentage point lower than bank credit loan rates. The rate hikes occurred amid regulatory concerns about household debt growth, with insurers reducing maximum loan limits from 95% to 85% of surrender value in April. Industry observers note that preferential rate programs introduced last year end continue to provide discounts of 0.1 to 5.0 percentage points for eligible borrowers.
Big 5 Insurers Raise Policy Loan Rates to 4% Range
According to the insurance industry on the 24th, the Big 5 non-life insurers—Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and Meritz Fire & Marine Insurance—recorded an average policy loan floating rate of 3.96% in June. This represents a 1.6 percentage point increase compared to January.
Samsung Fire & Marine posted the highest rate at 4.22%, followed by Meritz Fire & Marine at 4.07%, DB Insurance at 3.94%, KB Insurance at 3.84%, and Hyundai Marine & Fire at 3.73%. Meritz Fire & Marine showed the largest increase during this period at 0.29 percentage points.
The Big 5 life insurers—Samsung Life, Kyobo Life, Hanwha Life, Shinhan Life, and NH Nonghyup Life—recorded an average rate of 4.33% last month, up 0.06 percentage points. NH Nonghyup Life and Kyobo Life raised rates by 0.18 percentage points and 0.12 percentage points to 4.14% and 4.47% respectively. Samsung Life stood at 4.48%, while Hanwha Life and Shinhan Life recorded 4.26% and 4.29%.
Policy Loan Balances Reach 56.6 Trillion Won Amid Regulatory Tightening
Insurer household debt has grown centered on policy loans as the stock market boom fueled debt investment trends. Through May, insurer household loans increased by 900 billion won monthly, marking the largest monthly increase since July 2021.
According to the insurance industry, the combined policy loan balance of the top 10 life and non-life insurers reached approximately 56.6 trillion won at the end of last month, an increase of about 1.9 trillion won compared to January.
In April, following financial authorities' request for risk management, insurers reduced policy loan limits from 95% of surrender value to 85%, a 10 percentage point decrease.
Preferential Rate Programs Remain in Effect Since Last Year
Preferential rates for policy loans have been maintained at levels introduced at the end of last year as part of inclusive finance expansion. Preferential rate categories include high-interest insurance products, vulnerable groups, and non-face-to-face channels, with most categories offering discounts around 0.1 percentage points. Borrowers can receive preferential rates from multiple categories simultaneously.
For example, Samsung Fire & Marine provides a 0.5 percentage point discount on products with loan rates of 6% or higher, the largest discount among non-life insurers. NH Nonghyup Life applies a 6.5% interest rate cap on insurance contracts with guaranteed rates exceeding 5%. Since NH Nonghyup Life adds a spread to the guaranteed rate, this produces interest savings ranging from 0.1 to 5.0 percentage points.
An insurance industry official explained, "Preferential rates for policy loans have been maintained as introduced at the end of last year as part of inclusive finance expansion."
FAQ
What are the current policy loan rates at South Korean insurers?
The Big 5 non-life insurers recorded an average policy loan rate of 3.96% in June, while the Big 5 life insurers posted 4.33% last month. Individual company rates range from 3.73% to 4.48%, with Samsung Fire & Marine at the highest end at 4.22% among non-life insurers and Samsung Life at 4.48% among life insurers.
How much have policy loan balances increased at South Korean insurers?
The combined policy loan balance of the top 10 life and non-life insurers reached approximately 56.6 trillion won at the end of last month, representing an increase of about 1.9 trillion won compared to January. Through May, insurer household loans increased by 900 billion won monthly, the largest monthly increase since July 2021.
