Dementia Insurance Competition Heats Up Amid 'Aging Demand'... Loss Ratio Burden a Double-Edged Sword

New Dementia Insurance Products Hit the Market
Coverage Expands from Expensive Treatments to Home Care
Concerns Rise over Potential Loss Ratio Burdens amid Fierce Competition

Competition among insurers to provide coverage for dementia treatment costs is intensifying. Products with expanded coverage—from special riders guaranteeing high-priced treatments to those encompassing early diagnosis and home care—are being launched one after another. Some are concerned that if the competition for coverage continues in the long term, it could lead to a burden from increased loss ratios.

According to the insurance industry on March 11, NH NongHyup Life Insurance launched the "NH All Wonderful Memory Secure Dementia Insurance" the previous day. This product is designed to provide monthly living expenses for up to 10 years upon diagnosis of mild dementia, allowing policyholders to prepare for long-term treatment and care. It also covers targeted drug therapies, such as Leqembi, which has proven effective for the treatment of very mild dementia. If dementia does not occur, the policy can be converted into an annuity to be used as retirement funds. Park Byunghee, CEO of NH NongHyup Life Insurance, stated, "We will continue to introduce practical dementia coverage products in response to the aging society."

Other insurance companies have also introduced a variety of dementia insurance products in succession. After Heungkuk Fire & Marine Insurance developed a special rider for the cost of targeted dementia drug therapies in January last year, non-life insurers such as Meritz Fire & Marine Insurance, Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance, as well as life insurers including Kyobo Life Insurance, Mirae Asset Life Insurance, and Samsung Life Insurance, have competitively expanded coverage related to dementia treatments and launched products that strengthen guarantees for home care, examination expenses, and living allowances.

Dementia progresses from mild cognitive impairment (MCI) through mild, moderate, and severe stages. As the condition advances to the severe stage, communication becomes difficult, and continuous assistance or constant care from guardians is required. In the past, dementia insurance typically paid a lump sum upon diagnosis of severe dementia, but recently, products offering coverage from the early stages have been increasing.

In particular, the dementia treatment drug "Leqembi (lecanemab)" has emerged as a key focus in the dementia insurance competition. The medication alone costs around 40 million won over an 18-month treatment period, making it a high-priced therapy. Considering these cost burdens, insurers have launched special riders for coverage, and the coverage limit, which initially stood at about 10 million won, has recently been expanded to 20 million to 30 million won or more.

"Seize the Dementia Market"... Loss Ratio Management Becomes a Challenge

Within the industry, there are warnings that if the competition to sell dementia insurance overheats, it could lead to a long-term burden from increasing loss ratios. Due to the nature of the condition, dementia and nursing care insurance tend to have long benefit periods and large costs, such as care expenses, so if the loss ratio rises, the structural burden can intensify.

Despite being aware of this potential loss ratio burden, insurers are competitively launching new products to gain the advantage of being early movers in the market. With the dementia insurance market expected to grow steadily due to population aging, companies are seeking to secure early subscribers and maintain long-term contracts.

As a result, some insurers are aggressively expanding coverage limits to capture the market, while others are focusing on loss ratio management by reducing coverage, leading to diverging strategies. Recently, Tongyang Life Insurance proactively adjusted certain coverage limits and eligibility criteria for dementia insurance as part of its loss ratio management efforts. Industry observers predict that, given the significant long-term risk associated with dementia and nursing care insurance, more companies may move to moderate their sales pace.

Financial authorities are also closely monitoring the market situation. The Financial Supervisory Service has reportedly requested data from insurers regarding dementia insurance coverage limits and the basis for loss ratio estimates, as it examines whether competition is becoming overheated. An industry official said, "Given the speed of population aging, demand for dementia insurance will continue to rise," but also noted, "If the competition to guarantee treatment costs is excessively expanded, it could worsen loss ratios, so balanced product design is needed across the industry."

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