South Korea's life insurance industry has been facing tough times struggling with a protracted period of low interest rates and a decrease in the number of economically active people due to population ageing.
Also, most of the life insurers are concerned about their negative spread because of their large portfolios of the policies sold in the past with guaranteed fixed interest rates that exceed the interest yield that can be earned today. The low interest environment has also led to a sharp drop in the sales of savings insurance.
Amid rising life expectancy and falling birth rates, South Korea is going through a demographic shift. By 2040, those in their 60s will make up a large portion of the population, with the size of those in their 20s – 40s being reduced to the half of those in their 60s.
The retirement of baby boomers inevitably leads to a decrease in economically active population and slower economic growth, putting a drag on life insurance market growth.
This has forced life insurers to shift their marketing focus on protection products, such as health insurance products designed to accommodate the needs of an ageing population, rather than on savings products.
These circumstances raise the need for life insurers to come up with strategies to cater to both young and old consumers. Indeed, many life insurers are now working to strengthen preventative and other healthcare services, such as nursing care, in partnership with health care service providers.
According to a 2023 study conducted by the Korea Life Insurance Association and the General Insurance Association of Korea, 62 out of 250 local governments across the country had a shortage of nursing facilities, with 21 districts in Seoul having insufficient facilities compared to user demand.
According to media reports South Korean insurers are accelerating their entry into the nursing industry. Leading life insurance player Samsung Life Insurance has recently made an entry into the nursing sector.
A couple of years back KB Life Insurance had established its subsidiary KB Golden Life Care as the first nursing facility business company in the financial industry. It opened the Gangdong Care Center for day and night care in 2017 followed by Warye village in 2019 and Seocho village in 2021. Plans are on the anvil to create more urban-type nursing facilities.
In November 2024 Shinhan Life began its senior subsidiary Shinhan Life Care and opened its first long-term care facility 'Bundang Day Care Center'. The company is now focussing to provide a 'total life care' service for seniors.
Hana Life in its recent board meeting decided to enter the nursing industry. The company has decided to establish a nursing subsidiary. It is also likely to launch a day care service in the second half of 2025. The company also plans to construct a premium nursing facility near Seoul in 2026.