Kakao Pay under South Korea’s dominant chat platform operator Kakao Corp. is cleared to ready and launch digital non-life insurance business within the year.

The Financial Services Commission on Thursday said that it has granted preliminary approval for Kakao on its business plan on insurance upon judging that it meets capital, business proposition, and health management requirements.

Kakao’s digital non-life insurer – invested 60 percent by Kakao Pay and 40 percent by Kakao – begins service with 100 billion won ($89.6 million) initial capital.

The FSC said that it judged the digital non-life insurer will be able to contribute to the innovation and competition in insurance industry and boost consumer convenience through its insurance service linked to Kakao Group’s digital technology and platform.

According to its business plan, the digital insurer will provide platform-based self-designed insurance products.

It will create niche insurance products for social clubs, mobile phone damages, children, and Kakao Mobility-linked taxi and e-bike safety.

The new digital non-life insurer would boast simplicity in subscribing through Kakao Talk and Kakao Pay and fast claim review based on artificial intelligence technology.

The final approval will be granted after Kakao’s non-life insurance unit submits application after it draws invest capital, hires employees, and establishes facilities in six months.

Kakao would make the first pure-play entity to gain digital insurance license. Other services are offspring of mainstream insurer - Kyobo Lifeplanet Life Insurance of Kyobo Life Insurance and Carrot General Insurance of Hanwha General Insurance.

Shares of Kakao surged Thursday after preliminary approval. The stock closed up 3.49 percent at 133,500 won after hitting its intraday high of 134,000 won.

By Lee Eun-joo

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