Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Demographic crisis drives life insurers into non-life insurance sector
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By Yi Whan-woo
Life insurance companies are progressively rolling out products aimed at covering medical expenses related to cancer, diseases, and other health threats amid a rapidly changing demographic landscape, according to industry officials, Wednesday.
Traditionally, these products are marketed by non-life insurers, allowing policyholders to derive lifelong benefits for maintaining a healthier lifestyle.
In contrast, life insurers traditionally offer products where the benefits accrue to designated beneficiaries upon the policyholder's death, in exchange for premiums paid during their lifetime.
Under the circumstances, the new sales strategy of life insurance companies is perceived as an attempt to achieve a breakthrough in business amid challenging sales conditions caused by declining birth rates and an aging population.
“These changes include lower birth rates, more single-person households and a fast aging society, which all suggest a decline in the number of customers in the long term and diminishing business potential,” a spokesman for Kyobo Life Insurance said.
The country’s overall fertility rate dropped to 0.72 in 2023 from 0.78 the previous year.
The number of single-person households in Korea surpassed 10 million for the first time in March.
By 2025, the country is widely expected to become a super-aged society, in which the proportion of those aged 65 and older will account for 20 percent of the total population.
Three major market players — Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance — accordingly introduced a total of seven products in the first quarter this year that cover the medical expenses of insured clients.
The number of such products more than doubled from the previous year and also outnumbered ones introduced by the country’s five major non-life insurers during the same period.
The five are Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance and Meritz Fire & Marine Insurance.
Shin Seung-eun, an independent insurance sales agent, said more life insurers are asking her to promote their new products.
“I get the impression that they are dealing with the products with a sense of urgency,” Shin said.
The life insurers currently account for 28.7 percent of the non-life insurance market, and the remaining 71.3 percent is occupied by the non-life insurers.
But industry sources said competition between life insurers and non-life insurers will intensify in the coming years.
They noted that Samsung Life Insurance wants to hike the ratio of non-life insurance related deals to 60 percent of all new customer contracts this year, up from an average of 40 percent so far.
Kyobo Life Insurance is currently promoting a campaign focused on long-term insurance plans tailored for medical treatments.