[Manbo Jeongdam] "From Cradle to Grave... If It's Insurance, We Should Walk Together"

Interview with Jeong Hee-su, Chairman of the Life Insurance Association
Urgent Need for Life Insurers to Enter Nursing Care and Funeral Service Sectors
"We Must Be Able to Accompany Customers Until the Final Life Cycle"

Editor's NoteEditor's Note: 'Manbo Jeongdam (萬步情談)' is a segment under the '10,000 Steps a Day, 1,000 Characters a Day' campaign, featuring interviews with notable figures who love walking. The interviews are conducted while walking together, discussing topics such as work, life, health, and happiness.

"When it comes to life insurance, we must walk alongside our customers throughout their entire lives, from cradle to grave."

It has been three years since he took office as the Chairman of the Life Insurance Association, and this remains his unwavering philosophy. Jeong Hee-su, who assumed the position at the end of 2020 during the height of the COVID-19 pandemic, is now able to roam outside more freely. On the 29th, we conducted an interview while strolling through Namsan Hanok Village in Jung-gu, Seoul, with Chairman Jeong, who had removed his usual mask.

As a three-term lawmaker, he was accustomed to walking alongside his constituents. Even now, after work, he never stops walking, even if only at the gym. Born in 1953 and 70 years old, his pace is as brisk as that of the MZ generation (Millennials + Generation Z). His stride is large and confident, and his walking speed was faster than that of many young people.

Chairman Jeong said, "Walking is a far more important full-body exercise than people realize and can be considered the foundation of all healthcare." He added, "Regular walking is well known to reduce the incidence of late-life depression, dementia, cerebrovascular and heart diseases, as well as various cancers. Therefore, I recommend walking on an empty stomach and with those around you whenever possible."

Healthcare as a 'Win-Win-Win' for Customers, Insurers, and the Nation

Jung Hee-soo, Chairman of the Life Insurance Association, is being interviewed on the 29th at Namsan Hanok Village, Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Although walking has become a habit, he remains an insurance professional at heart. He understands insurance through walking and envisions the future through it. Life insurance companies have already begun managing customers through walking. Starting with AIA Life, the first in the insurance industry, several companies including Hanwha Life, Samsung Life, and Kyobo Life have launched healthcare services based on walking. They offer various rewards for walking certain distances. Insurers analyze the health data recorded as customers achieve their exercise goals to develop better services. As customers' health improves, their risk of disease decreases, reducing the insurers' payout burden. This benefits both customers and insurers.

Chairman Jeong foresees these healthcare services growing further in line with recent trends of aging populations, increasing chronic diseases, and digital expansion. According to the global market research firm GIA, the worldwide digital healthcare market is expected to grow from $152 billion (approximately 201 trillion KRW) in 2020 to $509 billion (approximately 674 trillion KRW) by 2027, at an average annual growth rate of 18.8%. Non-face-to-face medical consultations have also increased. In 2020, the first year of implementation, there were 840,000 users and 1.42 million consultations. These numbers surged to 3.19 million consultations and 1.26 million users in 2021, and further to 32 million consultations and 12.72 million users in 2022. Chairman Jeong stated, "Going forward, the government and public institutions should actively open healthcare-related data they hold to quickly recognize and prevent health risks in daily life."

He particularly pointed out the need for more proactive government involvement. The momentum in the healthcare sector remains insufficient, and insurers should step up to invest in healthcare and actively support the growth of this field.

MyData, a personal credit management service that has expanded from finance to telecommunications and e-commerce, is expected to significantly boost the healthcare industry if applied there. However, it is currently hindered by regulations. Under the Medical Service Act, personal medical data, which includes sensitive information such as disease history and treatment/prescription records, cannot be freely transmitted by medical personnel to other businesses. If patients could receive their medical data and transmit it to third parties as they do with financial information, healthcare services could become more sophisticated and personalized. Furthermore, collaboration among medical institutions, pharmaceutical companies, and insurers to discover new business opportunities could become more active. However, the medical community opposes this due to concerns about personal information leaks. Therefore, government intervention is necessary to coordinate these issues.

Chairman Jeong emphasized, "People generally do not study or take care of their health well on their own; they need someone to push them. Just as health supplements face minimal regulation, insurers should be allowed to play a role in promoting public health before people get sick enough to visit hospitals."

He believes that extending healthy life expectancy through this approach would greatly benefit the nation. Chairman Jeong explained, "Medical expenses in the last 10 years of life account for two-thirds of lifetime medical costs. Increasing 'healthy life expectancy,' the period of living healthily in the latter part of life, would be a great help not only to individuals and families but also to the national health insurance finances."

Jung Hee-soo, Chairman of the Life Insurance Association, is walking along the Namsan Hanok Village trail in Jung-gu, Seoul on the 29th. Photo by Kang Jin-hyung aymsdream@

Private Pensions Should Contribute to Strengthening the Social Safety Net

He also argued that life insurers should promote private pension activation to strengthen the social safety net. Chairman Jeong said, "Although we have entered the 100-year life era, South Korea still holds the unfortunate distinction of having the highest elderly poverty rate." He pointed out, "The actual income replacement rate of public pensions is less than 25%, and people tend to spend their retirement pensions all at once on their children's weddings or buying houses, making structural poverty inevitable."

Therefore, he advocated establishing a 'three-tier pension' system consisting of public pensions, retirement pensions, and private pensions, and increasing income deductions in the private pension sector. He explained, "Since 98% of people receive their retirement pensions as lump sums, incentives such as tax benefits are necessary. We are proposing to the government and authorities to provide bold tax benefits, such as almost no tax on lifetime annuity receipts, and to expand consumer choice by adding minimum guarantee options to variable insurance products for retirement pensions."

Life Insurance Industry Faces Shrinking Opportunities

Chairman Jeong stressed that the life insurance industry must prepare for the aging society. South Korea's total fertility rate fell to 0.78 last year, the lowest among OECD countries. With rapid demographic changes, the population aged 65 and over is expected to exceed 10 million by 2025, marking the entry into a super-aged society. The purchasing power of existing policyholders is gradually declining, and the new demand base is shrinking.

Non-life insurers, whose asset sizes are less than half those of life insurers, have already surpassed life insurers in performance. According to the Financial Supervisory Service, the net profit of 23 life insurers last year was 3.7055 trillion KRW, down 6.0% from the previous year. Meanwhile, the net profit of 31 non-life insurers increased by 26.7% to 5.4746 trillion KRW during the same period. The gap, which was about 380 billion KRW in 2021, widened to approximately 1.7 trillion KRW.

Therefore, finding new growth engines for the life insurance industry is urgent. Chairman Jeong said, "In advanced countries, the domains of life and non-life insurers are clearly separated, but in South Korea, the third insurance sector, including health insurance, cancer insurance, and children's insurance, has been opened to non-life insurers, disrupting this balance. It is necessary to restore this balance."

Breakthroughs Must Be Found in 'Last Steps' of Life Cycle, Including Long-term Care and Funeral Services

Chairman Jeong believes that the industry should focus on the 'last steps' of the life cycle, including long-term care and funeral services. He said, "It is financially difficult for the government to cover all these areas, so the private sector must bear part of the responsibility. The role of insurers, especially life insurers, needs to grow." He added, "Insurance should move beyond whole life insurance that ends with death benefit payments and develop capabilities in long-term care and funeral services."

However, several barriers remain, especially regarding the establishment of long-term care facilities. According to the Elderly Welfare Act, to establish a long-term care facility for 30 or more people, the operator must own the land and building to prevent 'eat-and-run' incidents. Currently, KB Insurance is the only insurer that has met these conditions and entered the long-term care service business. Finding suitable sites in urban areas with high demand is difficult, and initial costs are enormous.

Chairman Jeong believes that if the government and National Assembly relax these regulations, life insurers could provide more stable services. Demand is already clear. KB Insurance's long-term care business subsidiary, KB Golden Life Care, reportedly has up to 14 times the number of applicants compared to its capacity. He explained, "Demand for long-term care facilities will increase further in the aging society. To meet this demand, roles should be divided between national-level support from the National Health Insurance Service or local governments and private facilities led by insurers."

He also sees the funeral service sector, the final stage of the life cycle, as an area where insurers need to enter. Funeral services can be viewed as a financial domain where people pay regularly to reduce burdens during difficult times. Since insurers are fundamentally financial companies, they can provide more precise and stable services. Although demand for funeral services is increasing, consumer damages caused by small-scale providers are also rising. Chairman Jeong pointed out, "Distrust of funeral companies leads families to pay only for a month or two when an elder is in critical condition, which is not the true function of funeral services." He continued, "People should be able to pay for funeral services confidently for 10 or 20 years. Just as people want trustworthy nursing homes, hospitals, and caregivers, insurers' entry is urgently needed rather than simply protecting small local businesses."

Jeong Hee-su, Chairman of the Life Insurance Association, is walking along the Namsan Hanok Village trail in Jung-gu, Seoul on the 29th. Photo by Kang Jin-hyung aymsdream@