South Korea’s financial regulations are hampering insurers’ efforts to secure a next growth engine.
Global companies based on information and communications technology (ICT), such as Google, Alibaba and Tencent, are making an aggressive investment in insurtech, which refers to the use of technology innovations to the insurance industry. These companies are crossing boundaries between industries, benefiting from eased regulations and expanding the insurance market.
The amount of investments in the global insurtech market greatly increased from US$370 million (418.29 billion won) in 2012 to US$2.21 billion (2.50 trillion won) in 2017. The Chinese insurance industry is known to have successfully created new profit models using healthcare services worldwide. Chinese internet giants’ healthcare service business expansion and the Chinese government’s support have led the growth of the Chinese insurance market.
ZhongAn Online P&C Insurance Co., a Chinese online-only insurance company, joined hands with IT giant Tencent to launch “Diabetes Policy” in 2015, which reflects diabetics’ health conditions in insurance premiums. The product is a profit model connecting blood glucose monitoring devices, medical information transmission, big data establishment and telemedicine. China’s Allianz also developed “Kaishi,” which check the health state of mothers-to-be and babies through a digital device. It collects information on babies’ health conditions through a digital device and checks information on the nutrition and health status of mothers-to-be through real-time telemedicine.
Various new products are pouring into the U.S. market, which is considered the sacred place for insurtech and healthcare startups, every year. UnitedHealthcare’s Motion is a wearable device which helps participants track steps, set goals and earn 1.10 million won (US$973) per year by meeting certain daily walking goals. Lapetus Solutions, Inc. is now developing a product that compute insurance premiums by analyzing the age and body mass index (BMI) of insurance policy holders through their selfies as the company believes that selfies are more useful to analyze health risks than actuarial hypothesis.
Japan has succeeded in commercializing healthcare services early. Dai-ichi Life Insurance released “Ken Kou Dai-ichi (Health First)” in 2017. This is a smartphone app which analyzes health information of users, such as age, BMI, amount of smoking and drinking, and set up a goal. It also offers incentives when users meet their certain goals. Sumitomo Life Insurance has joined hands with IT giant SoftBank to establish a platform for the collection of health-related data and develop related products.
Telstra, the biggest mobile network in Australia, has promoted the healthcare industry as its new growth engine and developed an integrated healthcare product that connects patients to doctors, doctors to service suppliers, and services and information at the right time.
Foreign insurance companies have been launching various insurance products combining healthcare services in the global market. However, domestic insurers have been unable to do so due to regulations. In fact, it would be a win-win if insurance companies reduce premiums for customers who work out hard to lower the chances of insurance payment. But this possibility has remained unrealized for years with financial authorities unwilling to come forward to untangle the complicated problems among ministries and interest groups.
An official from the life insurance industry said, “Under the current circumstances, insurance companies and startups can’t but shoulder legal risks in order to enter the healthcare market. They are providing just a very basic level of healthcare services.” The government said it would come up with a “manual on healthcare based on non-medical services” shortly and revise related guidelines in September so that insurance policy holders can be offered high-priced wearable devices. However, insurers have already run out patience.