According to reporting by Aju Business Daily on the 27th, major nonlife insurers including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance and DB Insurance will roll out fifth-generation plans on May 6. The launch had been set for May 1 but was adjusted in consideration of a holiday break.
The fifth-generation product shifts benefits toward severe conditions. Unlike the fourth-generation plans, which broadly covered noncovered services, the new plans keep coverage for severe noncovered care but reduce limits and reimbursement rates for nonsevere noncovered services. Manual therapy and some new medical technologies are excluded, and the out-of-pocket share for nonsevere noncovered care rises to as much as 50%.
Premiums are also expected to drop sharply, offering an alternative for people who do not frequently use noncovered medical services. For a man in his 40s enrolled in second-generation plans—where insurers have the largest number of policyholders—the average monthly premium as of the end of last year was about 45,000 won, compared with an estimated 17,000 won for the fifth-generation plan.
Insurers expect the changes to curb excessive use of noncovered care and improve a loss-ratio structure that has been described as chronically unprofitable. Indemnity health insurance has posted high loss ratios for years, weighing on insurers’ profitability. According to the Korea Insurance Research Institute, the combined risk loss ratio for first- through fourth-generation plans reached 119.3% as of the third quarter of last year.
Still, industry officials say broader adoption will depend on moving first- and second-generation policyholders into the new plans. Those older products can be maintained long term with coverage lasting to age 80 or 100 and typically offer broader benefits, raising concerns that customers will see little reason to switch.
“First- and second-generation indemnity plans, unlike the third and fourth generations, are structured so policyholders can keep their existing coverage,” an industry official said. “If there are not sufficient incentives to encourage switching, the impact of the market overhaul could be limited.”
Financial authorities plan to announce measures soon, including a contract buyback option to encourage conversions of first- and second-generation policies, as well as guidance related to optional riders. Financial Supervisory Service Gov. Lee Chan-jin said at a press briefing late last month that even after the fifth-generation plans launch, incentives would remain an issue for continued discussion.
* This article has been translated by AI.
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