A protection evolution: How life and health insurance in Korea is changing - and what comes next

Winnie Ching, Head of Life & Health, North Asia; and Marianne Gilchrist, Head of L&H Globals and South Asia, Swiss Re, share their views on the trajectory of Korea’s life and health insurance industry as the pandemic increases focus on protection and digitalisation drives new consumer demands, compelling insurers to deliver more tailored and innovative products.

How have you seen the life and health insurance landscape evolve in Korea over the past few years?

Marianne: Korea’s insurance industry has always demanded agility. What’s changed during COVID-19 is the ability to manage that accelerating pace with new tools and technologies. The pandemic has not only compounded the need for a smooth digital customer experience as sales and claims functions move online, but also called for increased digitalisation when developing our own processes and workflows. The regulatory framework has become a lot more flexible as the pandemic necessitates taking a much closer step toward the client.

Winnie: An increased emphasis on customer-centricity has taken centre stage over the last five years. A deepening focus on protection requires insurers to move beyond just paying claims, by extending their service offerings and becoming a more consistent, supportive presence in their customers’ lives.  

Do the Korean consumers’ views and expectations around protection differ versus those elsewhere?

Marianne: Levels of insurance ownership are high here relative to the rest of the region and a mature market lends itself to a more risk conscious consumer. Korea is one of the few markets where almost every insurance product is transparently available to search for online. Today more than ever, customers are deep diving into the terms and conditions of their insurance to really understand what they are eligible for – not just in terms of payments but also services. Even during the peak of the pandemic, we saw people inquiring whether their medical insurance could provide access to personal protective equipment (PPE) such as masks. In this market, to remain competitive, insurers really have to differentiate their products based on types and timeframes of benefits, while also prioritising affordability.

What do you see as the main drivers for technology as a transformative force in insurance?

Winnie: Technology has always played a key role in connecting with consumers, as well as enhancing operational productivity and efficiency. But since the pandemic, it’s not even a choice anymore. What was nice to have, like an online platform for claims or policy information, is now a necessity. The use of data also enables customer acquisition through more more refined customer segmentation in terms of needs and risks.  This way insurers can offer the right product to the right customer at the right time.

Marianne: Korea has always been a very innovative society, but it took something like the pandemic to really leverage the environment and tools that were already in place. Insurers have had to accelerate efforts to present their suite of offerings online seamlessly as customers grow more comfortable buying and upgrading products virtually. The industry has risen to the occasion, and we’ve seen five years of change taking place in a single year.

What sort of product innovations have technology and data helped enable here in Korea?

Winnie: An early success in the past decade was the senior cancer product launched in Korea back in 2012. At the time, insurance penetration and access in the senior space – for those above the age of 60 – was very low. Our senior cancer product helped address this protection gap. Empirical data analysis of this target segment allowed us to confidently provide insurance protection for cancer to seniors along with tailored underwriting guidelines to Korean insurers, addressing their concerns for this segment. Over the years we have expanded this proposition to further increase insurance access, for example, by offering "simplified underwriting (SIO)' hospital cash products. Most recently, we launched a new targeted cancer therapy cover which addresses how cancer treatments and related costs can vary. By analysing data on treatment trends and consumer needs we’ve been able to extend coverage to more advanced and targeted therapies.

CARE, our Claims Automated Rules Engine is another good example which assists clients in triaging and decision-making components of claims management to make consistent claims decisions and improve claims management. We launched this product in Korea in September and have already started seeing successes and a strong pipeline of interest.

Marianne: Health Age is an innovative product that was created based on the enhanced data accessibility available in Korea that we’re rolling out across the region. It applies a personalised health risk assessment model to biometric data to determine the consumer’s biological or ‘health age,’ which may differ from chronological age, and the customer is then underwritten based on this number. The result is a highly personalised premium offering that effectively rewards them for healthy living.

This plays into something consumers want in their policies, which is fairness and recognition of their efforts to become and stay healthy. We’re proud to have launched this in Korea, and look forward to developing further innovations and partnerships here that will serve as models for the industry regionally and globally.

What kind of potential do you see for partnerships and platforms when it comes to the life and health space here?

Winnie: Big distribution platforms in Southeast Asia and China such as PingAn are increasingly gaining traction, we see online only companies to have grown in excess of 30% in 1H2021 despite the uncertain economic outlook.  Being able to better harness their data and analytic capabilities has been a great value-add for the industry, and I expect this To be the next phase of development for Korea as well.

Marianne: Partnerships between reinsurers, insurers and service providers in the insurance space in Korea is not new. What’s changed is that a more flexible regulatory approach is facilitating genuinely holistic healthcare services, enabling us to better align our digital capabilities and bundle services and insurance together. This integration promises positive outcomes for the industry, and for our customers. 

What are the key areas of opportunity when you look at the next decade in the industry? 

Marianne: There’s incredible potential to be more proactive in contributing to the well-being of customers. Consumers in Korea, and elsewhere in Asia, love getting rewards for healthy behaviour. Incentivising healthy habits or achievements that can be tracked through wearable or other devices ties in well with our aim to be a more regular part of people's lives – not just paying out when they need to claim, but helping ensure they don’t have to file a claim in the first place.

This is better for society, the economy and for the insurance industry. Data privacy needs to remain a priority, but consumers here and elsewhere have shown they’re willing to share data if they can expect something useful in return. 

Winnie: There is certainly room for growth in online distribution in Korea. However, it’s not necessarily a zero-sum game where the face-to-face channel is going to shrink. The human touch and personal relationships will always play a vital role at certain stages of the customer journey. More importantly, we see technology as a tool to enable the industry to deliver better advice and insights to customers and enable them to make better decisions to support their health and wellness.