"Insurance Market Polarized by High and Low Age Groups... Need to Establish Differentiation Strategies"

Korea Insurance Research Institute Report on 'Next Insurance: Demographic Changes and the Insurance Industry'

Population Structure Changes and Polarization of the Insurance Market (Source: Korea Insurance Research Institute)

[Asia Economy Reporter Oh Hyung-gil] The insurance market may be divided into two segments in the future: the saturated elderly market with a high population ratio, and the younger market with a low population ratio but a new market familiar with the digital environment. It is pointed out that differentiated product and sales strategies must be established.

On the 12th, Kim Se-jung, a research fellow at the Korea Insurance Research Institute, stated in the report "Next Insurance: Demographic Changes and the Insurance Industry," "The insurance industry must prepare for quantitative and qualitative changes in the population structure."

The report diagnosed that demographic changes promote corporate digital innovation, causing changes in the insurance industry, and that demands for corporate social responsibility can influence the expansion of insurers' roles.

Research fellow Kim said, "The decrease in the working-age population due to aging causes a contraction of the insurance market, and the insurance industry must respond by expanding its business areas," adding, "To resolve growth stagnation, healthcare business, comprehensive asset management services, corporate risk management consulting, public-private partnership models for catastrophic risks, and expansion of capital market cooperation models are required."

He continued, "The rise of the digital generation will accelerate the entry of big tech into the insurance industry," pointing out, "Big tech companies secure everyday customer touchpoints, so they are highly likely to expand market share by providing insurance as part of comprehensive financial services."

He also advised, "To compete with new players, it is necessary to strengthen customer touchpoints and provide consumers with diverse customer experiences and services," and "Digitalization should be accelerated through collaboration with fintech companies or internalization of technology."

Research fellow Kim analyzed that when the majority of the population consists of elderly people, the overall social system inevitably shifts to focus on the elderly. Therefore, the insurance industry should play a leading role in the long term by strengthening guarantees or services related to mental health such as dementia, caregiving, and nursing care to alleviate intergenerational burdens and create an elderly-centered social environment.

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