[1mm Financial Talk] Health Insurance Becomes the Biggest Battleground for Insurers at the Start of the Year

Life Insurers Strengthen Benefits to Target Health Insurance Market, Traditionally Dominated by Non-Life Insurers
Sales of Health Insurance Increase Over Whole Life Insurance Due to Aging Population and Low Birthrate
Non-Life Insurers Also Launch Personalized Products to Retain Customers

From the beginning of the year, health insurance, the mainstay of the tertiary insurance market, has emerged as the biggest battleground for insurance companies. Health insurance, which covers health, injury, and illness, is the stronghold of non-life insurers holding about 70% market share. Life insurers are striving to win back customers by offering more segmented coverage and cheaper premiums.

According to the insurance industry on the 7th, Hanwha Life introduced the 'NoesimH Health Insurance' at the start of the new year. It expanded coverage beyond the primarily covered cerebrovascular diseases and ischemic heart disease to include severe cardiovascular diseases such as heart failure and aortic dissection. Considering that brain and heart diseases often require concurrent treatments like surgery, thrombolytic therapy, and thrombectomy, coverage is provided per treatment. Noting that sequelae often accompany onset, the product also includes special riders for rehabilitation and caregiver support benefits.

DB Life also launched the 'Practical N 7 Major Diseases Health Insurance' this year. This product covers the seven major diseases?cancer, cerebrovascular disease, ischemic heart disease, moderate or higher chronic pulmonary disease, liver disease, chronic renal failure, and moderate or higher dementia?as many times as the customer chooses with a single rider. A simplified underwriting version was simultaneously released to allow people with pre-existing conditions and the elderly to enroll.

ABL Life introduced the 'Health N More Coverage Comprehensive Insurance' early this year. The main contract guarantees death, but with separate riders, coverage can extend to cancer, caregiving, surgery, hospitalization, dementia, cerebrovascular disease, arthritis, and more. It is a simplified underwriting product that allows enrollment if the applicant does not fall under specific categories such as hospitalization, surgery, or re-examination opinions within the past three months. ABL Life also newly established the 'No-accident Customer Contract Conversion Rider' this time. Through this, customers can switch to cheaper contract terms and receive premium discounts if they have no hospitalization, surgery, or specific disease diagnosis during the no-accident period (1 to 5 years) after enrollment.

Health insurance was not a core product for life insurers. Life insurers mainly sold whole life insurance guaranteeing death or savings-type insurance with deposit characteristics. However, as their revenue sources shrank due to low birth rates and aging populations, they are now focusing on selling health insurance. Under the International Financial Reporting Standards (IFRS17) system, protection-type insurance like health insurance is also advantageous for securing Contractual Service Margin (CSM). This is why life insurers are trying to attract subscribers by expanding coverage items or broadening customer groups to include those with pre-existing conditions compared to before. As of the third quarter of last year, the proportion of health insurance (excluding death coverage) among protection-type insurance based on cumulative new contract amounts for life insurers was 80%, up 10 percentage points from 70% in the same period the previous year.

Non-life insurers have also developed personalized products to defend their market share. Hyundai Marine & Fire Insurance launched the 'My Life (3N) Customized Simplified Health Insurance' early this year. Existing simplified insurance required combined disclosure of hospitalization and surgery history periods, so if either applied, the insured had to pay the same premium as someone with a pre-existing condition. However, this new product separates the disclosure periods for hospitalization and surgery up to five years each. It subdivides individual treatment histories into 35 types and reflects them in the premium. For example, if there is a hospitalization history from one year ago but no surgery history within five years, the insured can enroll at a premium about 15% cheaper than existing products.

KB Insurance also introduced the '3.N.5 Wise Simplified Health Insurance Plus' as a new product this year, available to people with mild to severe pre-existing conditions. This is a product exclusively for those with pre-existing conditions, and the duty to disclose must be strictly observed before contracting. KB Insurance introduced the ‘No-accident Contract Conversion System’ in this new product, allowing customers whose health improves to renew the same coverage at a lower premium. Customers without hospitalization or surgery records for a certain period receive annual premium discounts.

Hanwha General Insurance also launched the 'More Mild Simplified Health Insurance' early this year. It extended the disclosure period for hospitalization or surgery from 'within 5 years' in existing products to 'within 10 years,' allowing enrollment at premiums about 16% lower than existing products. If there is no treatment history for diabetes or hypertension within 5 years, premiums can be reduced by up to 29%. The hospitalization living expenses rider and caregiver usage hospitalization living expenses coverage period were strengthened to one year.

The competition to launch new health insurance products to secure market share is expected to continue for the time being. However, due to overheating competition, financial authorities are expected to impose regulations, and the phenomenon of selling out marketing will likely continue this year as well. In fact, the proportional treatment expense coverage product, which became a new trend in health insurance coverage in the second half of last year, has been completely banned from release starting this year due to regulatory measures. Proportional coverage products increase the insurance payout per year as medical expenses increase. From the insured's perspective, the more treatment they receive, the more insurance money they can get, which raised concerns about moral hazard.