 |
Korean Re headquarters building. (Photo: Korean Re) |
[Alpha Biz= Paul Lee] Seoul, July 13, 2025 — Korean Reinsurance Company (Korean Re) has lost a legal battle against the Korea Fair Trade Commission (KFTC), as the Supreme Court overturned a lower court ruling partially in its favor and remanded the case to the High Court, upholding the legitimacy of the KFTC’s corrective order and fine.
The case stems from a 2018 KFTC decision to fine Korean Re KRW 7.87 billion and issue a corrective order for obstructing potential competitors’ entry into the domestic general aviation reinsurance market. The commission found that Korean Re imposed unfair clauses in contracts with primary insurers, including provisions that required exclusive contracts and prohibited reinsurance transfers to other domestic firms. Korean Re filed a lawsuit in 2019 seeking to nullify the sanctions.
Legal experts interpret the ruling as a reflection of Korean Re’s weak competitiveness. Observers suggest that had Korean Re maintained price competitiveness comparable to global reinsurers, it would not have needed to restrict competition through unfair practices. The case specifically concerns general aviation insurance—coverage for small aircraft rather than commercial airlines—raising concerns about market distortion in a niche but growing segment.
Industry professionals also noted Korean Re’s limited capacity to underwrite aviation risk, especially for large-scale liabilities. For example, the liability limit in last year’s Muan air crash was estimated at KRW 1.5 trillion, while Korean Re’s net income in 2024 stood at KRW 285.1 billion. Reinsurers typically rely on retrocession—ceding part of the risk to overseas reinsurers—for such high-value exposures.
From 2013 to 2017, Korean Re held an average 88% market share in Korea’s general aviation reinsurance segment. However, with emerging industries such as Urban Air Mobility (UAM) prompting local insurers to explore new aviation products, the market is expected to grow and attract global competition. Korean Re must now contend not only with foreign reinsurers such as Swiss Re and Munich Re, both of which maintain branches in Korea, but also with rapidly evolving market dynamics.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
