This study aims to propose mid- and long-term development directions for different segments of the surety insurance business, so that surety insurance can transition into an advanced and efficient system after restructuring.
Since its introduction in the 1960s, the surety insurance system has facilitated credit provision for underprivileged citizens or small- to medium-sized enterprises with relatively weak collateral. By quickly compensating for losses incurred by the insured, it also contributed to the construction of a credit society in Korea, as well as the nation’s general economic development. Surety insurance tends to be affected by economic cycles. Because of this characteristic, during the Asian financial crisis of 1997, surety insurance companies faced massive defaults, which prompted the government to execute a major restructuring through mergers and injections of public funds.
The impact of the economic cycle is not the only reason for the current problems. Surety insurance companies that have grown their business under an overly-protective government were not capable of properly conducting credit evaluations, and their business strategies—which focused more on quantitative growth rather than qualitative growth—failed. In addition, they did not develop new financial instruments and did not establish in-house risk management systems. Additionally, these companies showed a lack of expertise in asset management.
Authorities should understand these issues and take actions so that the advantages of the surety insurance system can be exploited to promote the national economy.
금융환경변화에 따른 보증보험의 중장기 발전전략(Mid- and long-term development strategies for surety insurance amid changes in the financial sector)
[서울] : 한국개발연구원
|Series Title; No||연구보고서 / 2000-01|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|