Wednesday, December 13, 2017

Korean official warns interest rate hike could disrupt insurers

A senior official at the Financial Services Commission (FSC) has warned of a possible disruptive change in the country’s insurance industry once the central bank decides to raise its key rate in the coming months.

FSC vice-chairman Kim Yong-beom made the pronouncement ahead of the Bank of Korea’s plan to raise its key rate, a first for the central bank after more than six years.

Kim, however, did not specify what the change was or how a rate increase will affect the insurance industry.

He told a forum on the insurance industry that the biggest disruptive change to South Korea’s industry emerged when the normal interest rate environment was redefined.

Market participants have been expecting the Bank of Korea to raise interest rates for the first time in more than six years at its November 30 meeting.

Nonetheless, economists insisted that there is no urgent need for a rate increase due to subdued inflation.

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