As it emerged recently that some heads of nursing homes had taken out protection-type insurance policies using operating funds and the government launched a full survey, similar cases had been uncovered for years in audits by local governments. Critics say the issue was left unattended for a long time because oversight by the Ministry of Health and Welfare and the financial authorities was lacking.
According to comprehensive audit results conducted by the Gyeonggi Province Audit Committee on cities and counties in the province from 2021 to 2025, nursing homes in a total of 11 cities and counties were found to have taken out protection-type insurance policies and were ordered to take corrective action. Gyeonggi conducts comprehensive audits of four to five cities and counties in the province each year, and issues were found in about half of them. By year, they were two in 2021 (Suwon, Ansan), two in 2022 (Anseong, Yongin), one in 2023 (Osan), three in 2024 (Namyangju, Gapyeong County, Gunpo), and three in 2025 (Dongducheon, Pyeongtaek, Gimpo).
Under the Standards for Establishing and Operating Long-term Care Institutions, nursing homes may set aside environmental improvement provisions or operating provision reserves for projects that require long-term funding, such as construction or facility investment. However, such funds must be accumulated in savings products with no principal loss, be available for immediate cashing, and both the account holder and the beneficiary must be changed to the institution's name.
Many of the facilities flagged in the audits did not follow these standards. In Dongducheon, which received related findings in last year's comprehensive audit, some facilities were found to have taken out whole life insurance policies under the personal name of the facility director. Some even canceled policies after September last year and incurred principal losses. In Osan, uncovered in 2023, two nursing homes in the city were managing about 97 million won through insurance products, with about 51 million won in losses if canceled midterm.
Meanwhile, the responses of cities and counties were inadequate as mismanagement recurred. Some recognized issues such as taking out protection-type insurance but failed to take meaningful action, showing lax oversight. When a specific issue repeats, they should notify the competent ministry or request system improvements, but that also did not happen properly.
The government and supervisory authorities also stood by. Although Gyeonggi's audit results are shared through the Public Audit System jointly used by the government and local governments, they failed to grasp the recurring issues. A Ministry of Health and Welfare official said, "We knew there were some cases, but we did not identify the overall scale."
As oversight slackened, it was recently confirmed that some heads of nursing homes took out whole life insurance policies using facility operating funds and diverted the money for private use. They took out whole life policies under the facility's name and paid the premiums, then after a certain period changed the policyholder to themselves, canceled the policy, and pocketed the refunds. The Financial Services Commission and the Financial Supervisory Service belatedly launched a full survey of whole life insurance enrollment at more than 30,000 nonprofit long-term care facilities nationwide.
An industry official said, "The situation escalated because the government and supervisory authorities failed to properly recognize an issue that has been recurring steadily," adding, "Even now, local governments should strengthen guidance and inspections, and the reporting system should be improved so audit results are accurately shared with the government."