Naver Pay will end its savings insurance comparison and recommendation service on the 23rd of this month. Although the Financial Services Commission designated it as an innovative financial service and it launched in June 2024, it is set to disappear in less than two years.
According to the insurance industry on the 16th, as of that day only two insurers—Kyobo Life Insurance and ABL Life Insurance—still have partnerships with Naver Pay for the savings insurance comparison and recommendation service. Hanwha Life Insurance and Tongyang Life Insurance notified Naver Pay last month that they would end their partnerships. The partnerships with Samsung Life Insurance, which participated from the launch, and NongHyup Life Insurance, which joined later, have also ended. Under the innovative financial service guidelines, a comparison and recommendation service cannot be maintained if there are fewer than three partnered products for more than one month.
The insurance comparison and recommendation service compares premiums and other terms of products sold by insurers at a glance and recommends products favorable to customers. It expanded from auto insurance in January 2024 to pet insurance, travel insurance, and savings insurance. The financial authorities designated it as an innovative financial service, and organizers prepared the business ambitiously by holding a demo event with a famous actor.
Insurers said they decided to end partnerships because few customers were coming in through the savings insurance comparison and recommendation service. They said savings insurance has low profitability, and there is no reason to participate in the service while also bearing management expense.
Savings insurance refers to products in which the future payout exceeds the premiums paid by the customer. If monthly premiums are less than 1.5 million won, premiums are paid for at least five years, and the policy is maintained for at least 10 years, the interest income tax (15.4%) is exempt. However, its popularity has declined because the rate of return is set lower than other investment products. For a man in his 30s, the savings insurance interest rate (declared rate) is lower than the Bank of Korea's base rate (2.5%).
The pet insurance comparison and recommendation service is being operated through partnerships with four companies: DB Insurance, KB Insurance, NongHyup Property & Casualty Insurance, and Mybrown. Pet insurance compensates for expense incurred when a companion animal receives treatment at a hospital. The auto insurance and travel insurance comparison and recommendation services reportedly have no operational issues due to a large number of users.