German insurer ERGO eyes expansion in Korean market

By Kim Soo-yeon
DUSSELDORF, Germany, June 30 (Yonhap) -- German insurer ERGO Insurance Group is
hoping to expand in the Korean non-life insurance market by selling a product
next year that provides coverage for litigation costs, its chief said Tuesday.
Dusseldorf-based ERGO, founded in 1997, is Europe's 12th-largest insurance
company, but has a relatively small presence in South Korea. It is hoping to
change that as it seeks to expand its business into relatively untapped Asian
markets -- South Korea, China and India.
"We have an ambition to become a meaningful player in the Asian market... We're
just about to prepare to launch this product (legal protection insurance) first
in the Asian market. That will be Korea," Torsten Oletzky, chief executive
officer of ERGO, told reporters.
Legal protection insurance -- a comparatively new insurance product to Koreans --
covers the costs of hiring lawyers if an individual or company faces a lawsuit.
"The Korean legal system has been developed as a system which is very similar to
systems we know from Europe or Germany. So it's a good idea to start the business
there," Oletzky said, adding that the company has started to talk with the
association of lawyers in Korea and received positive responses from it.
Oletzky said the introduction of such a policy would be helpful for lawyers
because they could deal with more customers, who in the past might not be able to
pay their service fee. As for the customers, the insurer has a strong incentive
to recommend high quality lawyers to them to increase the chances of winning.
ERGO is planning to sell the first policy in South Korea in summer next year
after building up sales agent network.
Turning to its online motor insurance business in Korea, the German company said
its operation is small but "well-positioned" in the market.
ERGO made a foray into the Korean market in 2008 by buying a 65 percent stake in
Daum Direct Auto Insurance Co. an online auto insurance unit of Daum
Communications Corp., South Korea's No. 2 Internet portal operator. ERGO later
renamed it ERGO Daum Direct Auto Insurance Co.
"The direct motor insurance (business) continues to grow and the market share of
direct motor is now 20 percent of the total motor insurance (market in Korea),"
said Jochen Messemer, chairman of the board of management of ERGO International.
According to the company, ERGO Daum Direct is the second-biggest online auto
insurer with a market share of 14.6 percent in 2007 following its rival Kyobo Axa
with 27.7 percent.
Competition in the online car insurance market has heated up in Korea since
non-life insurer Samsung Fire & Marine Insurance Co., a subsidiary of
conglomerate Samsung Group, jumped into the race in March.
Messemer said ERGO is ready to compete with the new rival and considers the
entrance of Samsung "very supportive" because it would help the overall growth of
the direct auto insurance market.
The insurance market around the world has faced a business downturn as the global
economic slump, sparked by financial turmoil, raised unemployment rates, making
it difficult for more people to pay insurance bills.
But the head of ERGO said he saw the economic crisis as an opportunity for the
insurance sector to grow over the long haul.
"In the longer term, we believe the insurance industry can be a winner of the
crisis because in the end, the crisis makes it clear to everybody that there are
significant risks in life... Demand for insurance should increase from times of
uncertainty," Oletzky said.
ERGO, a unit of Munich Re AG, the world's biggest re-insurer, posted premium
income of 17.7 billion euros (US$24.8 billion) in 2008 and has operations in more
than 30 countries.
sooyeon@yna.co.kr
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