By Kang Seung-woo
Although cancer is the foremost cause of death in Korea, local life insurance companies are reluctant to add an insurance policy specializing in the disease due to growing loss ratios.
Instead, subscribers can add cancer coverage to other insurance policies such as permanent insurance or critical illness (CI) insurance.
According to the insurance sector, only nine life insurance firms out of 23 deal with policies mainly covering cancer, while Hyundai Marine and Fire Insurance is the only one among major non-life insurers.
The demise of such policies contrasts with the early 2000s, when they were the best-selling items among life insurers. In December 2003, 16 life insurance companies were selling cancer insurance.
The industry said that the companies’ declining interest in such products is attributed to the fact that the number of patients has increased, with companies’ losses from policies rising.
According to the Korea Insurance Development Institute (KIDI), the number of those diagnosed with cancer increased annually by 2.9 percent between 1999 and 2007, catapulting the loss ratio to around 120 percent
Thanks to the government’s efforts to overcome cancer and improved medical technology, the ratio of the early diagnosis and survival rates have climbed, meaning that it requires more money for patients to get treatment
As a result, they are requesting more money from insurance companies, driving up loss ratios. Hence, a large number of insurers, including the nation’s top three, Samsung, Korea and Kyobo, have stopped selling specialized policies and added the disease coverage to CI.
Among companies offering such policies, they have a tendency to shift to those where the premium can be renewed for years at a time, rather than those with fixed premiums until they mature. In this regard, Tong Yang Life Insurance has thrust itself into limelight of late, as it came up with a cancer policy at the beginning of June, 21 months after it stopped selling one.
In addition, firms have set insurance premiums higher to make up for swelling deficits.
Critics say that subscribers may have trouble fully understanding cancer coverage added to other policies because they cover various other diseases too.
“It is true that subscribers cannot have a full grasp of the policies, but they have their own merits in that holders can benefit from other coverage such as brain disease and heart attack,” said an industry official.