Nearly half of insurer credit loans in H1 went to borrowers with KCB scores above 900
Life insurers saw borrowers with scores below 700 drop 46% in two years; those above 951 rose 42%
Non-life insurers' credit loan market shrank by half, with low-credit lending virtually gone
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Mid- and low-credit borrowers who cannot secure loans from banks are now being squeezed out of insurers as well. Nearly half of all new household credit loans issued by insurers in the first half of this year went to borrowers with credit scores above 900, and the share going to mid- and low-credit borrowers has fallen to 21.6%.
Data on credit loan activity at life and non-life insurers, obtained by People Power Party lawmaker Kim Jae-seop's office from the Financial Supervisory Service, show that new household credit loans issued by life and non-life insurers from January through June totaled 2.21 trillion won ($1.65 billion). Of that, 1.07 trillion won — 48.2 percent of the total — went to borrowers with KCB credit scores above 900.
The concentration among high-credit borrowers has worsened every year. The share of total new loans going to borrowers with scores above 900 rose without interruption — from 41.8 percent in 2023 to 45.2 percent in 2024, 45.8 percent last year and 48.2 percent in the first half of this year. The share held by the highest-rated borrowers, those with scores of 951 or above, grew from 19.7 percent to 26.0 percent over the same period. Meanwhile, the share going to mid- and low-credit borrowers with scores of 800 or below declined from 27.4 percent to 25.8 percent to 24.1 percent, and fell further to 21.6 percent in the first half of this year. The share for borrowers with scores of 700 or below shrank from 7.5 percent to 4.5 percent.
Life insurers shift to high-credit borrowers as non-life credit lending halves
Breaking down the figures by sector, life insurers expanded their overall lending while the borrower base shifted sharply toward high-credit customers. New credit loans at life insurers grew 22.4 percent, from 2.92 trillion won in 2023 to 3.58 trillion won last year. Over the same period, the number of borrowers with scores of 951 or above rose 42.4 percent, from 20,822 to 29,649, while those with scores of 700 or below fell 46.2 percent, from 20,525 to 11,050 — widening a gap that had been roughly even in 2023 to a ratio of 2.7 to one. In 2023, four in 10 life insurer credit loan recipients (39.7 percent) had scores of 800 or below; in the first half of this year, that figure was fewer than three in 10 (28.3 percent).
In the non-life insurance sector, the credit loan market itself shrank by half. New credit loans at non-life insurers fell 46.5 percent, from 707.8 billion won in 2023 to 378.9 billion won last year, while the number of borrowers dropped 53.9 percent, from 61,876 to 28,513. As the market contracted, the tilt toward high-credit borrowers intensified. In the first half of this year, borrowers with scores above 900 accounted for 60.7 percent of new non-life insurer credit loans — 12.5 percentage points above the insurance sector's overall figure of 48.2 percent. The share going to borrowers with scores of 800 or below fell from 15.0 percent in 2023 to 8.8 percent in the first half of this year. New loans to borrowers with scores of 700 or below totaled just 1 billion won in the first half of this year, accounting for only 0.5 percent of the total.
Even as borrower credit quality has improved, interest rate burdens remain heavy. Among insurers' average credit loan rates — weighted by new loan volume — Heungkuk Fire & Marine Insurance posted the highest rate in the first half of this year at 9.9 percent, followed by Kyobo Life at 9.6 percent, Hanwha Life Insurance at 9.2 percent and Heungkuk Life at 9.0 percent.
Industry observers say the influx of high-credit borrowers into the insurer market reflects demand pushed down from the primary banking sector. "The fact that people are coming all the way to insurers for loans means more people are being shut out elsewhere," one industry official said. "Those who couldn't get loans from first-tier financial institutions are moving into the second tier, so the borrower base that used to be dominated by mid- and low-credit customers has fundamentally changed."
For mid- and low-credit borrowers with shrinking options, savings banks have emerged as a key lending channel. Comparing major credit loan products between January and October, the share of new loans at SBI Savings Bank going to borrowers with Nice credit scores of 800 or below rose 6.01 percentage points, from 79.08 percent to 85.09 percent. The figures at OK Savings Bank climbed from 76.84 percent to 78.60 percent, and at Welcome Savings Bank from 86.21 percent to 87.25 percent. By contrast, the share of borrowers with scores above 900 fell at SBI Savings Bank from 2.79 percent to 1.38 percent, and at OK Savings Bank from 2.16 percent to 1.02 percent.
The growing share of mid- and low-credit borrowers at savings banks is attributed in part to deregulation. Financial authorities excluded increases in mid-rate loans from aggregate household lending caps and also exempted mid-rate lifestyle stabilization loans of up to 10 million won from limits on credit loans within annual income. "Deregulation is driving more mid- and low-credit borrowers to take out loans," one industry official said, adding that the overall expansion in total lending means a declining share for high-credit borrowers does not necessarily indicate that high-credit lending has actually decreased.
"If insurers also expand lending primarily to high-credit borrowers, mid- and low-credit borrowers who actually need the funds most could be pushed toward even higher interest rates," lawmaker Kim said. "Financial authorities must put in place effective measures to improve financial access for mid- and low-credit borrowers."
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