Q2 Insurance Company Loan Delinquency Rate Hits 1.08%, Highest in 15 Years

First 1% Range Since September 2011
Corporate Loan Delinquency Soars to 1.21%
Financial Supervisory Service: "Guidance to Strengthen Asset Quality Management"

In the second quarter of this year, the delinquency rate on loan receivables at insurance companies rose above 1% for the first time in 14 years and 9 months. Delays in economic recovery, defaults related to construction and real estate, and ongoing geopolitical uncertainties have all affected the asset quality of insurers' corporate loans.

Financial Supervisory Service Headquarters in Yeouido, Seoul. Financial Supervisory Service

According to the "Status of Insurance Company Loan Receivables as of End-June 2026" released by the Financial Supervisory Service on August 28, the balance of loan receivables at insurance companies stood at KRW 266 trillion, an increase of KRW 1.9 trillion from the previous quarter.

The balance of household loans amounted to KRW 136.1 trillion, up KRW 1.6 trillion (1.2%) quarter-on-quarter. This increase was largely attributable to a rise of KRW 1.4 trillion in policy loans within household loans. Corporate loan receivables increased by KRW 300 billion (0.2%) to a total of KRW 129.8 trillion.

As of the end of June, the delinquency rate on loan receivables at insurance companies reached 1.08%, an increase of 0.26 percentage points compared to the previous quarter. This is the first time the delinquency rate for insurance company loan receivables has exceeded the 1% range since the end of September 2011 (1.18%), marking a 14 year and 9 month interval.

The delinquency rate for household loans declined by 0.04 percentage points quarter-on-quarter, to 0.83%, whereas the delinquency rate for corporate loans rose by 0.41 percentage points to 1.21%.

The non-performing loan (substandard and below) ratio at insurance companies also increased, climbing by 0.18 percentage points quarter-on-quarter to 1.31%.

The non-performing loan ratio for household loans edged down by 0.01 percentage points to 0.67%, while the ratio for corporate loans rose by 0.27 percentage points to 1.62%.

As both the delinquency rate and the non-performing loan ratio rose, primarily in corporate loans, asset quality indicators in the insurance sector have deteriorated. These changes are attributed to delays in economic recovery, defaults related to construction and real estate, as well as geopolitical uncertainty in the Middle East. Each of these factors has independently contributed to the decline in asset quality.

A Financial Supervisory Service official stated, "Owing to recent increases in economic volatility and the delay in economic recovery, delinquency and non-performing loan ratios within the insurance sector have risen. We plan to guide insurance companies to sufficiently strengthen their loss-absorbing capacity in response to rising delinquency rates and to further reinforce asset quality management."

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