Korean insurers in race to introduce limited edition insurance products

South Korean insurers are in an intense competition to attract new contracts from the beginning of the New Year, leading them to introduce limited edition insurance products that can only be subscribed to by a certain date.

According to insurance industry sources on Tuesday, both life and non-life insurance companies in Korea are scrambling to offer limited edition riders in cancer insurance products as premiums are expected to rise following the revision of the experience life table in April 2024.

The experience life table is a gender- and age-specific mortality table updated every five years by observing the deaths of life insurance policyholders.

With this revision, the average life expectancy is 86.3 years for men and 90.7 years for women, up 2.8 years and 2.2 years, respectively, from five years ago.

Kyobo Life Insurance Co. introduced a new cancer insurance product on January 8, which is on sale for a limited time. The Generous Cancer Insurance will be sold for only three months until the end of March.

It covers up to 800,000 won ($597.76) for outpatient cancer treatment and offers a non-renewable cancer insurance where the monthly premium does not increase until maturity, and if cancer is not diagnosed by maturity, the full amount is refunded.

Hanwha General Insurance Co. is also selling the Lady Cancer Plan II of its flagship product, Hanwha Signature Women’s Health Insurance 2.0, for a limited time in January.

This plan increases the diagnosis fee limit for integrated and metastatic cancers to 30 million won from 20 million won, and covers 10 million won each for anti-cancer proton radiotherapy and anti-cancer intensity-modulated radiotherapy.

Mirae Asset Life Insurance Co. has also made it possible to subscribe to a cancer rider that increases outpatient cancer treatment expenses to 800,000 won from 700,000 won and chemo-radiotherapy expenses to 50 million won from 30 million won until the end of this month.

“If the experience life table is revised, there could be differences in premiums depending on the time of subscription,” said an industry insider. “The recent expansion of coverage for minor cancer and the introduction of advanced cancer treatment equipment have led to higher loss ratios, raising the possibility of a 10 percent increase in cancer insurance premiums, hence the appearance of limited edition insurance products marketing.”

Health insurance is no exception.

Samsung Life Insurance Co. has launched a limited-time sale for individual riders within its Da-Moeun Health Insurance. It has increased the subscription limit for illness and accident surgery benefits from 400,000 won to 1.6 million won and also increased the coverage for chemotherapy and radiation-related drug treatment from 30 million won to 50 million won until February 6. The fracture diagnosis subscription limit will also be raised from 300,000 won to 600,000 won until February 29.

The introduction of the new International Financial Reporting Standards (IFRS17) in 2023 is also a factor intensifying the competition for new contracts among insurance companies.

Under the new standard, insurance companies first recognize the value of held contracts as a contract service margin (CSM), which is then amortized annually at a certain rate as insurance operating income.

To create a virtuous cycle where future profits increase through an increase in CSM, the value gained from new contracts each year must exceed the amount amortized.

The country’s financial regulators are moving to apply brakes to the overheated competition for new contracts among insurance companies.

Life insurance companies competitively raised the 10-year refund rate of short-term payment whole life insurance at the beginning of the year, with some offering 135 percent of premiums back.

In response, the Financial Supervisory Service launched on-site inspections of Shinhan Life Insurance Co. and Kyobo Life Insurance on Monday and began written inspections for other insurers.