The Financial Services Commission (FSC) has given preliminary approval for a non-life insurance licence for Kakao. This is the first time a non-insurance company has been approved to offer digital insurance services.
Kakao’s non-life insurance company has a capital of KRW100bn ($90m), which is owned 40% by Kakao and 60% by Kakao Pay which is a unit of Kakao. The former is South Korea’s dominant mobile messenger app operator whereas Kakao Pay is the group’s mobile payment company.
The new company needs to apply for full approval in six months after it has hired staff as well as establish offices and the necessary infrastructure. With final approval, Kakao will be the country’s second digital-only general insurer following Carrot General Insurance. Carrot is a digital insurance joint venture among Hanwha General Insurance, SK Telecom, Hyundai Motor and Altos Ventures.
Kakao’s digital insurer can tap Kakao’s technologies and platform. It will work with other Kakao subsidiaries, including Kakao Mobility and Kakao Kids, offering various non-life insurance products. KakaoPay itself has 36m subscribers, a number which exceeds those of conventional, big non-life insurance players, most of whom have less than 10m users each.