After being put on hold for a while by the financial authorities, competition in caregiver insurance is heating up again. The daily allowance for hiring caregivers was reduced to the 100,000 won range under the authorities' guidance, but several insurers have recently begun touting coverage up to 200,000 won, kicking off a race to lock up the market.
As of the 1st, according to the insurance industry, Hanwha Life Insurance(088350), Hyundai Marine & Fire Insurance(001450), NH Nonghyup Life Insurance, and KDB Life Insurance are selling products that provide a daily allowance for caregiver use, excluding nursing hospitals, up to 200,000 won. Caregiver insurance is a product in which the insurer covers the expense when the policyholder hires a caregiver during a hospital stay.
Hana Insurance raised the daily caregiver allowance limit, excluding nursing hospitals, from 150,000 won to 200,000 won early this month, then lowered it back to 150,000 won starting on the 11th. The company said it temporarily expanded the daily allowance coverage to boost the product's competitiveness and attract customers.
As recently as May last year, major insurers such as 삼성화재 and Meritz Fire & Marine Insurance successively cut the daily caregiver allowance to around 100,000 won. This followed a recommendation by the financial authorities to lower coverage limits to prevent excessive competition among insurers and curb overtreatment. There were also cases of patients with mild conditions being hospitalized to receive insurance payouts even when caregiving was not necessary.
As of the end of last August, the risk loss ratio of caregiver insurance was tallied at an average of 99% for life insurers and 83.1% for non-life insurers. The risk loss ratio is the percentage of the risk premium—premiums set aside by insurers to pay claims—that is actually paid out as insurance benefits. A 99% risk loss ratio means 99 won out of 100 won in risk premiums was paid out as insurance money.
Insurers' renewed push for 200,000 won coverage is seen as a strategy to seize the market. They aim to secure subscribers by advertising relatively high coverage limits while competitors have reduced theirs. Caregiver insurance is considered one of insurers' flagship collateral alongside cancer diagnosis and cancer treatment coverage. With the population aging, the industry expects related demand to continue to grow steadily.
A representative of the general agency (GA) industry said, "With the summer vacation season approaching, some insurers are front-loading products that cover daily caregiver use up to 200,000 won and are mounting large-scale marketing campaigns to boost sales," adding, "Competition to preempt market share is heating up again."
The Financial Supervisory Service is also watching these moves closely. In the first half of this year, the Financial Supervisory Service requested the Korea Insurance Research Institute to study ways to improve the caregiver insurance system. Although insurers revised their terms after repeated criticism of the flimsy product structure of caregiver insurance, concerns persist that fraudulent claims are worsening. Since May, the Korea Insurance Research Institute has been studying improvement plans for market conditions, product structures, and claims payment methods.
An insurance industry representative said, "In caregiver insurance, when one insurer raises the coverage limit, competitors tend to follow suit at similar levels to maintain sales competitiveness," adding, "If this competition repeats, the loss ratio will inevitably worsen over the long term."