AGCS recently said “annyeonghaseyo” to the South Korea insurance market and opened an office in Seoul. Among the product offerings is engineering & construction insurance, just as the country undertakes many large-scale tunnel, bridge, and other infrastructure projects, explains Yong Hwan Choi.
1. AGCS only recently opened an office in Seoul. What are the challenges of writing large engineering exposures in an emerging economy?
South Korea’s emerging economy is impacted by much uncertainty and radical change, which are occurring more rapidly than in more established economies. This change affects businesses and various stakeholders in the engineering and construction industry, including principals, contractors, architects, lenders and government representatives, each of whom are exposed to risks that can be addressed by insurance solutions. Providing globalized underwriting and risk management experience and local underwriting expertise to these stakeholders will be welcomed by our clients.
2. What infrastructure challenges does South Korea have that you think Allianz’ engineering expertise can help with?
The demand for large and heavy transportation systems has been increasing in South Korea, which leads to the need for the construction of large scale tunnels, bridges and other infrastructure improvements. Each project is unique and includes proto-typical technology from design to operation, which demands tailored insurance services. We have been providing comprehensive solutions which include risk consulting, claims and underwriting teams to our global clients with construction exposures for years. Our technically accomplished teams can now provide that same expertise with South Korean clients.
3. One of the target segments for AGCS Engineering is large, complex risks in the green energy space. What is the outlook for the renewable energy market in South Korea? Which specific sectors is AGCS targeting?
The power generation market in South Korea heavily depends on coal and nuclear. However, the new Korean government that came into power following the political turmoil earlier this year is proposing a new energy strategy that would discourage the use of coal and nuclear in favor of renewable energy – to increase from 5% to 20% of the country’s power supply by 2030. AGCS is ready to provide comprehensive solutions in this emerging sector, as an insurer with considerable experience in that space. We will be especially active in larger scale new technology areas such as wind and solar power projects.
4. What is the outlook for the engineering insurance market in South Korea? In what aspects can AGCS make a name for itself?
The engineering insurance market in South Korea has been suffering for several years with continuous volume shrinkage due to stagnation in the construction industry and the soft market situation in the reinsurance industry. Yet, fortunately, the loss ratio of the engineering insurance market remains low in the absence of natural catastrophes and massive accidents. AGCS South Korea will provide tailor-made combined solutions based on local expertise and global practical experience in complex risks. We are in South Korea for the long term and excited about the prospect of growing our footprint in the marketplace.