"Insurance Company Nursing Business Success... Should Refer to Japan's 'IT Technology Utilization and Large-Scale' Approach"

KIDI Report on 'Success Factors Based on Sompo Care Case'

There is an analysis that domestic insurance companies need to benchmark the Japanese case, which realized data, IT technology, and economies of scale, in order to succeed in the nursing care business.

On the 14th, the Korea Insurance Development Institute announced this through a report titled "Success Factors of the Nursing Care Business Viewed through the Case of Japan's SOMPO Care." SOMPO Care is a subsidiary of SOMPO Holdings, a major Japanese non-life insurance group.

Japanese insurers, who have experienced super-aging and market saturation ahead of us, entered the nursing care business early. Although the domestic insurance industry is also exploring entry into the nursing care industry, there are many challenges such as high initial investment costs and uncertain profitability. Due to the labor-intensive nature of the industry and the fact that the main source of income consists of benefits from public insurance (Long-Term Care Insurance for the Elderly), there is deep concern about improving profitability.

On the 9th, contact visits to nursing hospitals and nursing facilities, which had been restricted due to the risk of COVID-19 infection, became possible. At Gaeunmyeongwon in Bucheon-si, Gyeonggi Province, Lee Yong-beom is visiting his mother, Son Yong-chang. Contact visits are allowed only for guardians of patients or residents who are terminally ill, or severely ill patients, if they have tested negative for COVID-19 within 24 hours./Photo by Kim Hyun-min kimhyun81@

SOMPO Care entered the market through acquiring existing operators and establishing subsidiaries, successfully turning a profit in a short period, and currently leads the market with the largest facility scale and second highest sales. The success factors of SOMPO Care include ▲realizing economies of scale through large-scale operations ▲improving efficiency and expanding business areas by utilizing data and IT technology ▲improving marketing and admission rates based on nationwide sales networks and the brand recognition of a large corporation.

SOMPO Care digitized analog nursing care operations and improved processes by utilizing user data accumulated 24 hours a day at nursing facilities. In the mid to long term, it aims to reduce workload by 15% and save about 8.4 million yen (approximately 75 million KRW) annually. It is attempting to overcome the limited profit structure of the nursing care business and discover various revenue sources by packaging data utilization systems and consulting services to sell to other nursing facilities.

Following SOMPO Care's success, other Japanese life insurers are also entering the market. In November last year, Nippon Life, Japan's largest life insurer, acquired Nichii Holdings, the top nursing care company, and joined the nursing care market. Attention is focused on what changes will occur in the competitive landscape of the nursing care market.

The domestic nursing care industry differs from Japan in terms of market participants, regulations, and systems, making it difficult to directly apply success cases. However, it is noteworthy that, like domestic insurers, they have struggled with improving profitability and devised countermeasures, and that they utilized insurers' know-how in the nursing care business.

Domestic insurers can also reduce costs by improving inefficient processes through digitization of nursing care tasks and data utilization. Additionally, the introduction of IT devices such as caregiving robots and sensors is expected to enable efficient workforce management. A Korea Insurance Development Institute official said, "It is necessary to attempt to discover additional revenue sources through differentiated service development, such as consulting businesses targeting nursing facilities and senior total care services for economically capable middle-class, not limited to traditional nursing services," adding, "By utilizing big data accumulated through the nursing care business, it is also expected to create synergy between insurance and nursing care businesses, such as developing new insurance products or linking caregiving insurance with nursing care services."