In­sur­ers in dilemma over Naver’s ex­pan­sion into fi­nance

The Korea Times - - FINANCE - By Lee Min-hyung mh­lee@ko­re­atimes.co.kr

Ma­jor in­sur­ers are in a dilemma over emerg­ing threats from Naver, as the na­tion’s dom­i­nant in­ter­net por­tal op­er­a­tor is seek­ing to make rapid in­roads into the lu­cra­tive fi­nance in­dus­try by tak­ing ad­van­tage of its mas­sive user base.

Naver has re­cently con­tacted the so-called big four non-life in­sur­ers here — Sam­sung Fire & Marine In­sur­ance, Hyundai Marine & Fire In­sur­ance, DB In­sur­ance and KB In­sur­ance — for part­ner­ships be­fore the in­ter­net firm launches an on­line rate com­par­i­son site for car in­sur­ance.

Naver is re­ported to have de­manded the in­sur­ers pay around 11 per­cent of car in­sur­ance pre­mi­ums paid by sub­scribers re­ferred to them by the por­tal op­er­a­tor as an ad­ver­tis­ing cost.

De­spite the high com­mis­sion, they are in a grow­ing dilemma over whether to ac­cept Naver’s pro­posal due to the firm’s dom­i­nant on­line in­flu­ence in Korea.

Sam­sung Fire, the largest non-life in­surer here, has re­jected the offer, con­sid­er­ing its lead­er­ship par­tic­u­larly in the on­line car in­sur­ance mar­ket.

The com­pany also said it did not want to shift its com­mis­sion bur­den to sub­scribers by sign­ing the part­ner­ship with Naver.

DB In­sur­ance and KB In­sur­ance are also in in­ter­nal talks over whether to take part in the project.

As the site has not yet been launched, they are tak­ing a wai­t­and-see ap­proach be­fore sign­ing part­ner­ships with Naver.

The high com­mis­sion rate has caused the firms to hes­i­tate.

Amid mount­ing me­dia re­ports crit­i­ciz­ing Naver’s “ex­ces­sive de­mand,” Naver Fi­nan­cial, the fi­nan­cial ser­vice arm of the com­pany, took a step back­ward, deny­ing that it de­manded the 11 per­cent com­mis­sion fee in ex­change for the part­ner­ship on the rate com­par­i­son site.

The com­pany also said it did not have any spe­cific time­line for the launch of the ser­vice.

De­spite its de­nial, in­dus­try watch­ers be­lieve Naver’s in­roads into the in­sur­ance in­dus­try are loom­ing closer, af­ter Naver Fi­nan­cial es­tab­lished an in­sur­ance sub­sidiary called NF In­sur­ance Ser­vice last month.

Of­fi­cials in the non-life in­sur­ance in­dus­try re­mained neg­a­tive over Naver’s ex­pan­sion into the in­sur­ance sec­tor, as the com­pany is tak­ing ad­van­tage of “le­gal blind spots” to di­ver­sify its rev­enues in new ar­eas.

“If Naver or its fi­nan­cial sub­sidiaries are try­ing to tap into the in­sur­ance in­dus­try on an equal foot­ing as other traditiona­l in­sur­ers, no one can blame the por­tal gi­ant,” an in­dus­try source said.

“But this is not the case be­cause Naver is us­ing part­ner­ships with ex­ist­ing play­ers, rather than seek­ing to re­ceive li­censes, in an ap­par­ent move to evade reg­u­la­tions and reap more prof­its by us­ing its mas­sive in­flu­ence on the in­ter­net.”

Naver is of­ten com­pared with Kakao, the na­tion’s lead­ing mo­bile mes­sen­ger app op­er­a­tor, in that it has ex­panded its busi­ness on the back of the firm’s tens of mil­lions of users here.

Start­ing this year, both firms are speed­ing up their drive into the fi­nan­cial sec­tor, as they be­lieve they can draw more users from ex­ist­ing fi­nan­cial firms by us­ing their easyto-use on­line plat­forms.

But Kakao is rel­a­tively free from such a con­tro­versy, as the com­pany is ex­pand­ing its fi­nan­cial foothold af­ter ob­tain­ing li­censes just like ex­ist­ing fi­nan­cial play­ers, ac­cord­ing to the of­fi­cial.

“Kakao’s ma­jor fi­nan­cial sub­sidiaries — such as Kakao Bank and KakaoPay Se­cu­ri­ties — op­er­ate with li­censes and are com­pet­ing with other con­ven­tional play­ers on an equal foot­ing, which is one big dif­fer­ence be­tween Kakao and Naver,” the of­fi­cial said.

“It is not fair for Naver to op­er­ate any fi­nan­cial busi­nesses with­out rel­e­vant li­censes,” the source said.

“By sim­ply pro­vid­ing plat­forms, the com­pany can evade a se­ries of tough fi­nan­cial reg­u­la­tions. Un­der the cur­rent busi­ness struc­ture, Naver will bear lit­tle re­spon­si­bil­ity for any po­ten­tial mis-selling of fi­nan­cial prod­ucts, and only those who signed part­ner­ships with Naver will have to take all the blame.”

But chances are most mid­size and large non-life in­sur­ers will have to join hands with Naver amid their de­te­ri­o­rat­ing prof­itabil­ity in the car in­sur­ance busi­ness due to ris­ing re­pair costs.

Sam­sung Fire takes up more than half the on­line car in­sur­ance mar­ket share.

For this rea­son, more non-life in­sur­ers are un­der pres­sure to part­ner with Naver to ex­pand their pres­ence on­line as com­pe­ti­tion gets tougher.

Screen cap­ture from Naver Fi­nan­cial

A web­site of Naver Fi­nan­cial

Sam­sung Fire CEO Choi Young-moo

Naver CEO Han Seong-sook

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