Ben Son, CEO of Lockton Korea, recently shared his views on the insurance market in Korea and the growth trajectory of Lockton Korea in an interview with FNTimes, an online newspaper specializing in finance and capital markets in Korea.
The growth potential of the insurance brokerage market is huge... 38 billion KRW target by 2028.
"The need for insurance brokerage is bound to grow as new risks continue to emerge. Lockton Korea aims to achieve KRW 38 billion in sales by 2028."
Ben Son, CEO of Lockton Korea, shared insights into the outlook for the insurance brokerage market and Lockton Korea's growth goals. The company's five-year plan is progressing well, aligning with the growth of Lockton Korea.
"For the past year and a half since the merger in 2022, we have been working towards changing our corporate culture globally, including the establishment of a fair compensation system, to become a global insurance brokerage," said Ben Son, CEO of Lockton Korea.
The Pursuit of Organic Growth... Moving from 7th to 6th in market share
Lockton Korea was established when Lockton Group acquired IMI, Korea's top insurance broker, in 2010. Despite facing challenges due to the CEO's passing, Lockton Korea made a second leap forward in 2022 by merging with brokerage company Ed Korea. Since the merger, Ben Son, who was previously with Ed Korea, has been leading Lockton Korea.
While many insurance brokerage firms grow through mergers and acquisitions (M&A), Lockton Korea is focusing on organic growth, in line with Lockton Group's management approach. In fact, Lockton Korea has not engaged in any M&A activities since November 2022.
Lockton Korea aims to achieve 20% annual growth through organic growth. Last year, without any mergers and acquisitions, the company climbed from seventh to sixth place in terms of business deposits. CEO Son attributes this success to the hiring of personnel in line with Lockton Group's five-year plan.
"We plan to double our sales in the next five years according to our five-year growth strategy, which involves hiring 130 people by 2028, compared to 65 in 2023," said Ben Son, CEO of Lockton Korea. "We will continue to recruit younger employees."
Lockton Korea is focusing on corporate insurance, including property insurance (covering factory fires and storm/flood damage), liability insurance, and technology insurance (related to SOCs such as ports). The company follows a strategy of "selection and concentration," focusing on areas where they excel rather than attempting to cover all fields.
"Lockton Group started as a construction broker in the U.S. and has a strong presence in the construction field, excelling in insurance advisory areas such as SOCs and PF," explained Ben Son, CEO of Lockton Korea.
Lockton Korea's strength lies in renewable energy. CEO Son is confident that Lockton Korea's position in the offshore wind power sector is unmatched among renewable energy companies.
"We have been proactively highlighting the need for insurance to companies in the renewable energy sector, and we have gained extensive experience in the Korean renewable energy market by winning bids with excellent scores," said Ben Son, CEO of Lockton Korea. "Lockton Korea provides insurance advice for approximately 80% of offshore wind power facilities in Korea."
Lockton Korea's strength in offshore wind power is derived from benchmarking the offshore wind power experience of Lockton Group worldwide.
"In Europe, such as the UK, where we have a branch office, renewable energy is thriving, allowing us to provide technical support for insurance," Son added. "Our employees have had numerous opportunities to go on overseas business trips to benchmark and learn from field experiences, which we then apply domestically."
Unlike other insurance brokers, Lockton Korea has organized its structure with a team system to enhance professionalism, given its focus on corporate insurance. The sales department consists of teams specializing in different fields such as marine insurance, property insurance, and technical insurance.
Son explained, "By organizing teams in this way, we can specialize in each area and provide professional services to our clients."
New Risks Increase, Insurance Brokerage Market to Grow as General Insurance Market Expands
CEO Son believes that insurance brokerage is destined to grow in Korea. This is due to the ample room for the general insurance sector, widely used in overseas markets, to enter Korea.
Son stated, "When financial institutions invest, engage in project financing, or deal with SOCs, it involves costs in the trillions of won. For example, GTX-A alone is worth 1.8 trillion won. Unexpected accidents can occur, and companies cannot afford the risk without insurance. When the economy faces challenges, personal insurance is often the first to be cut, but companies cannot afford to take such risks without insurance."
Son also noted a shortage of industrial risk insurance in Korea. For instance, while cyber insurance is common overseas, it is not yet prevalent in Korea compared to the development of the IT industry.
"Cyber insurance is active in Europe and the United States, but it is not as active in Korea," said Ben Son. "Cyber insurance can compensate for losses caused by a fire in a company that cannot conduct transactions."
He emphasized that as the general insurance market grows, so will the insurance brokerage sector.
CEO Son highlighted that while Bitcoin transactions are increasing, the insurance coverage rate for accidents occurring during Bitcoin trading has significantly decreased. As the industry develops, the need for insurance will increase, and insurance brokers will play a more crucial role.
Insurance brokers can contribute to establishing a healthy insurance market by mitigating information asymmetry between policyholders and insurers, resulting in balanced coverage and fair contracts.
Son explained, "When individuals and companies purchase insurance, they are often non-experts in the field. Insurance agents focus on closing insurance contracts, which can lead to incomplete sales. However, insurance brokers, with their expertise, play a positive role in the development of the insurance market by avoiding underinsurance."
To revitalize insurance brokerage, the industry is advocating for the separation of roles. Son believes that this separation can alleviate revenue-driven insurance competition.
"Insurance companies' evaluation criteria are often based on sales, leading to competition focused on sales volume rather than actual profits," Son explained. "For example, when purchasing corporate fire insurance, it is necessary to avoid high-risk areas. However, if the probability of fire is high, the premium is also high, which contributes to sales. Therefore, there is a tendency to choose locations with high insurance premiums."
Son concluded, "There is an urgent need to separate roles, leaving sales to intermediaries who are professional sales channels."