Heungkuk Fire&Marine Insurance launched the industry's first new insurance product, "Platinum Health Reset Wallet," on the 7th of this month, featuring a guarantee limit restoration structure and risk calculation innovation techniques. The company announced on the 18th that it has applied for exclusive rights to use the product through the General Insurance Association of Korea.
This product allows customers to cover non-insured medical expenses such as surgery for cancer, brain, and heart diseases, chemotherapy, nursing costs, and use of private hospital rooms, and if there is any remaining guarantee balance, the structure restores the original state upon renewal after 20 years. Unlike existing fixed-amount products which lead to a "reduction in coverage limit based on usage," the key aspect is that if there's a remaining balance, the initial limit of 1 billion won is "reset" even if the coverage amount has been used.
In addition to non-insured cancer surgery and chemotherapy, radiotherapy, brain and heart surgeries, various coverage collaterals such as hospitalization and nursing costs are managed under a single integrated limit of 1 billion won.
To achieve this product structure, Heungkuk Fire&Marine Insurance introduced the "Copula" technique for risk calculation, becoming the first in the industry to do so. A type of function, copula is a tool that helps analyze the relationships among multiple variables by separating the individual characteristics of each variable and the correlations between them.
Heungkuk Fire&Marine Insurance applied copulas to calculate the excess amount payment for a combination of three collateral types: cancer, brain, and heart-related treatments, daily hospitalization in private rooms, and daily nursing costs. It calculated the distribution of insurance payment for each collateral using the statistical experience it possesses and combined this using copulas.
In the case of existing fixed-value collaterals, when the limit is exhausted, there is a risk of insufficient coverage during renewal. However, since the new product from Heungkuk Fire&Marine Insurance restores the limit during renewal, it reduces the possibility of coverage gaps due to increasing age.
Another feature of this product is that it pays 30% of the remaining coverage balance as the accident death benefit. The policyholder can check how much they have been covered and how much remains, and the remaining coverage balance from the total limit of 1 billion won can be received upon accidental death.
While in most existing products, the subscription amount is fixed after a 50% reduction in the first year or increased upon meeting certain conditions, Heungkuk Fire&Marine Insurance applied the "Residual Pricing" technique to reflect the volatility of the subscription amount in its pricing. As a result, healthier policyholders with lower medical usage can have higher accident death insurance amounts applied.
The development of this product was achieved through a task force over approximately one year, and Heungkuk Fire&Marine Insurance has applied for exclusive rights for a total of four items, including the application of the copula model, limit reset structure, residual pricing application, and integrated coverage structure.
A representative from Heungkuk Fire&Marine Insurance's product development noted, "The collateral of the Platinum Health Reset Wallet was developed to protect customers from economic risks arising from blind spots in real indemnity insurance, in line with the trend of easier treatment for serious illnesses due to advancements in medical technology. By incorporating the concept of a 'bank account' into insurance, customers can flexibly utilize coverage when needed, and the company can manage stable risks, thus achieving a structure where both customers and the insurance company can mutually benefit."