South Korean insurance contract loans match mortgage loan balances

The balance of insurance contract loans (약관대출) held by South Korean insurers has surged to almost the same level as mortgage loans (주담대) within a year. The gap between the two loan categories narrowed from about 2.9 trillion KRW a year ago to roughly 3.5 billion KRW. Major insurers—including Samsung Life, Hanwha Life, Kyobo Life, Samsung Fire, DB Insurance, Hyundai Marine, KB Insurance and Meritz Fire—reported a combined insurance contract loan balance of 47.6914 trillion KRW, while the mortgage loan balance stood at 48.0376 trillion KRW. The shrinkage reflects tighter mortgage‑loan channels, with some insurers halting new mortgage applications, and a shift of borrowers toward insurance‑backed credit. Insurers have reduced loan limits to 85 % of surrender value and raised mortgage‑loan rates to about 5.25 % on average, with credit‑linked rates reaching 7.41 %. The Financial Supervisory Service and Financial Services Commission are monitoring the trend, planning to raise capital requirements for insurance‑mortgage lending after September and urging stronger household‑debt management. Borrowers are warned that defaulting on insurance loans can lead to deductions from insurance claims or policy termination.