Chairman Chung Hee-soo of the Korea Life Insurance Association. (KLIA) (Photo: KLIA)

Chung Hee-soo, chairman of the Korea Life Insurance Association (KLIA), pledged to support the expansion of the healthcare market for the life insurance industry by preparing a construction insurance information sharing system.

Korea’s life insurance industry is suffering from low growth due to low birth rates, an aging population, and increased secondary reverse margins due to low interest rates.

The environment surrounding the life insurance industry is tough, with fintech expanding, the introduction of new financial soundness regulations, and fiercer competition for innovation due to convergence in the financial sector.

To turn this crisis into an opportunity and achieve sustainable growth, Chung will focus on four tasks in 2021.

“First, we will restore and strengthen customer confidence,” Chung said.

“A company’s growth and prosperity must be based on strong customer trust,” Chung added. “To restore customer confidence and sustainable management, we will move ahead with ESG management with our member companies. By spreading an ESG management culture all over the life insurance industry, we will be able to contribute to green growth such as climate change responses and carbon neutrality, and implement sustainable management such as spearheading social contribution campaigns for the marginalized.”

Chung is confident that ESG management will help the life insurance industry win more trust from customers.

Second, Chung will boost the competitiveness of the life insurance industry. Fourth industrial technologies, such as artificial intelligence and big data, are accelerating the digitalization of the financial industry in the wake of the COVID-19 pandemic.

“We will support the life insurance industry so that life insurers will be able to carry out their business activities in a non-face-to-face way by harnessing digital technology,” Chung detailed.

“In particular, the Korea Life Insurance Association will promote win-win growth among medical institutions, consumers, and life insurers by easing burdens on medical institutions by computerizing document issuance and simplifying insurance claiming processes through the early implementation of the Loss Compensation Insurance Claiming Computerization Project,” Chung said.

Chung vowed to step up efforts to strengthen the life insurance industry’s basic roles.

“We will strengthen life insurance’s roles as a strong social safety net in aging Korean society by developing various products and services from a consumer perspective and expanding tax benefits for the people’s social safety net after they retire,” Chung explained.

“Third, we will expand the life insurance industry market,” Chung said. “We will strive to expand the market to generate stable profits for the life insurance industry.”

Healthcare services have recently evolved thanks to technological advancements such as the internet of things, big data, and platforms, and the growing interest in health due to a spike in Koreans’ aging and chronic diseases will feed demand for healthcare services.

“We will support the expansion of the healthcare market in the life insurance industry by preparing a construction insurance information sharing system,” Chung continued.

“In order for healthcare services to develop further, life insurers should be able to utilize medical big data held by public institutions. I hope that life insurers will be able to enhance consumer benefits and prevent health insurance frauds through customized products and services if they will be able to get their hands on big data and make good use of them.”

Fourth, we will improve the business conditions of the life insurance industry.

Currently, life insurers are enduring sever pain such as asset disposal and business cost reduction to overcome management difficulties such as worsening profitability.

The International Accounting Standards (IFRS17) and the New Risk-Based Capital Ratio System are scheduled to come into effect in 2023. Life insurers are required to massively expand their capital due to increased debt and reduced capital with the introduction of practical debt valuation.

Chung promised to induce a soft landing of soundness regulations to minimize impacts from new capital soundness regulations. “We will strive to establish a stable profit generation base by reasonably readjusting product design standards in line with the changing accounting system,” Chung said.

“In addition, we will steadily endeavor to resolve uneven playing field issues involving big-tech platform companies under the principle of demanding the government enforce the same regulations on the same functions and prevent any regulatory vacuum from being created in the sale of pseudo-financial products by big-tech platform companies.”