"Insurance Companies' Path to Entering Long-Term Care Service Business Opens"... Authorities Review System Improvement Measures

[Asia Economy Reporter Kwangho Lee] Insurance companies are expected to actively enter the long-term care service business. This is due to the increasing demand for high-quality long-term care services driven by the inclusion of the baby boomer generation into the elderly population and the avoidance of multi-bed long-term care facilities amid COVID-19.

On the 15th, the Financial Services Commission held a meeting titled 'Discussion for the Activation of Insurance Companies' Entry into the Long-term Care Service Business' with the Financial Supervisory Service, the Korea Insurance Research Institute, and the insurance industry to discuss multifaceted measures.

In South Korea, the potential long-term care service target population continues to increase due to the rise in the population aged 65 and over and the increase in the late elderly population resulting from extended life expectancy.

According to Statistics Korea, by 2035, the late elderly population is expected to reach 7.09 million, accounting for 47% of the elderly population. The late elderly refers to those aged 75 and above.

First, there was an opinion that institutional improvements are needed to activate private sector investment and participation capable of providing high-quality long-term care services. It was suggested that regulations requiring ownership of land and buildings when operating long-term care facilities should be improved to alleviate the initial investment burden on private entities such as insurance companies.

There were also calls to expand long-term care facilities utilizing closed schools in cooperation with companies and local governments. It is expected that relaxing land and building ownership regulations, improving accessibility, and providing incentives such as rent reductions when operating long-term care facilities and daycare centers on closed school sites will promote private investment.

In particular, there was a proposal to activate the entry of insurance companies into the long-term care service business by linking it with in-kind payment type nursing care insurance. Currently, nursing care and dementia insurance policies that pay benefits in cash are being sold, but in-kind payment type insurance has not been activated due to risks related to the quality of nursing care services.

Additionally, ideas were proposed to allow payment of out-of-pocket expenses for using long-term care facilities by utilizing life insurance death benefits and testamentary trust assets. There were also suggestions to promote insurance companies' investments by lowering investment risk coefficients and easing credit provision regulations for insurance companies as long-term care service providers.

A Financial Services Commission official stated, "The entry of insurance companies into the long-term care service business is expected to have positive effects in strengthening the social safety net for the elderly, discovering future new businesses for insurance companies, and creating jobs," adding, "We plan to continuously review related institutional improvement measures by forming a consultative body with relevant ministries such as the Ministry of Health and Welfare, the industry, and related organizations."

This content was produced with the assistance of AI translation services.