South Korea: Insurance Companies to Explore New Frontiers
Life and Health Insurance companies in South Korea are poised to broaden their business horizons, with plans to venture into medical care, healthcare, and services for companion animals. This expansion comes as financial authorities ease regulations, allowing insurers to operate subsidiaries in these new areas.
The Financial Services Commission (FSC) unveiled these key initiatives during the 7th Insurance Reform Committee meeting, outlining the future direction of the insurance industry. The initiatives are designed to address three major shifts: population changes, climate challenges, and technological advancements.
Adapting to Demographic Shifts
Authorities emphasize that the insurance industry must quickly adapt to the rapidly evolving demographic landscape. Facing an aging populace, with expectations for 40% of Koreans to be elderly by 2050, the demand for traditional insurance products is projected to decline. This demographic evolution poses a significant challenge to the profitability of insurance companies.
In response, the FSC plans to expand the range of subsidiaries that insurance companies can operate. The goal is to enable insurance firms to create sustainable business models that effectively serve consumers’ needs.
New Business Opportunities
Insurance companies will be authorized to offer medical care through their subsidiaries. The nursing industry, in particular, is expected to benefit, improving profitability through the integration of nursing facilities with healthcare services. For example, a nursing subsidiary could offer personalized meal plans based on personal data. The establishment of nursing facilities by insurance companies will also be encouraged, with authorities relaxing existing limitations on facility management.
Subsidiaries focused on managing welfare facilities for the elderly, like senior housing, will also be permitted. Furthermore, pet-related businesses such as pet insurance subscriptions, veterinary booking services, and insurance claim processing will be integrated into a full-service platform.
Authorities anticipate that these system changes will encourage insurers to proactively assist individuals in retirement planning. The goal is to give individuals enhanced offerings that can better meet future needs. This strategic shift aims to secure the financial stability of the insurance sector amid the evolving demographic and economic conditions.
