Insurance companies are launching guaranteed insurance products one after another starting this year to generate stable profits. Guaranteed insurance includes whole life insurance, accident insurance, cancer insurance, and health insurance for adult diseases.
According to the financial sector on the 7th, DB Insurance launched the industry’s first health insurance product, “(non) Smart N 7 Major Disease Health Insurance,” which covers all seven major diseases with customizable coverage options for customers. The seven major diseases include cancer, cerebrovascular disease, ischemic heart disease, chronic obstructive pulmonary disease, liver disease, chronic renal failure, and moderate or severe dementia.
Hyundai Marine & Fire Insurance also launched “Hyundai Marine & Fire Insurance My Life (3N) Customized Simple Health Insurance” the day before, offering tailored pricing through detailed categorization of customers' treatment history. It features the separation of the reporting periods for hospitalization and surgery for up to five years, reflecting individual treatment histories in a total of 35 types of policy options.
Hanwha Life Insurance launched three enhanced whole life and health insurance products on the 2nd to secure a leading position in the guaranteed product market. The new products, “Hanwha Life H Whole Life Insurance” and “Hanwha Life Zero Back H Whole Life Insurance,” are characterized by an emphasis on diversified coverage, including death benefits, premium waivers, and retirement funds, compared to existing whole life insurance products that focused mainly on death benefits.
HANWHA GENERAL INSURANCE also introduced a new simple health insurance product on the same day, expanding coverage of hospitalization living expenses and integrated cancer and metastatic cancer coverage and riders.
Since last year, insurance companies have been making efforts to expand their health insurance lineup to improve their focus on guaranteed products. This is to enhance profitability under the IFRS 17 regulations introduced in 2023. Under the new accounting system, savings insurance requires insurance premiums to be returned to customers in the future, leading to it being classified as a liability on the balance sheet, making the sale of guaranteed insurance products more advantageous for insurance companies.
As a result, the profit structure of insurance companies is already being reshaped around guaranteed insurance. Kyobo Life Insurance has reported that its income from guaranteed insurance premiums surpassed that from savings insurance in the first half of last year. Samsung Life Insurance also saw its guaranteed insurance premium income significantly exceed that of savings insurance. The same is true for Hanwha Life Insurance.
However, with the Bank of Korea signaling a potential further cut in the key interest rate this year, there is growing concern that the solvency ratio (K-ICS), a key indicator of the soundness of insurance companies, may decline. The solvency ratio indicates an insurance company's ability to pay claims to policyholders.
Currently, the solvency ratio in the insurance sector is decreasing due to interest rate cuts. According to the Financial Supervisory Service, as of the end of June last year, the KICS ratio of insurance companies was 201.5%, down 5.1 percentage points from the end of March. During the same period, the ratio for life insurance companies fell by 8.3 percentage points to 191.7%, while that for non-life insurance companies decreased by 0.5 percentage points to 215.6%.
An industry insider noted, “After the introduction of the new accounting system, insurance companies have almost stopped launching savings insurance products,” adding that “given the profit of insurance companies and the current economic environment, they simply cannot avoid this situation.”