Approaching a Super-Aged Society: Insurance Companies Accelerate into the Elderly Care Industry

As South Korea rapidly approaches a super-aged society, insurance companies are intensifying their efforts to enter the elderly care industry. 

As South Korea rapidly approaches a super-aged society, insurance companies are intensifying their efforts to enter the elderly care industry. With the percentage of the population aged 65 and older expected to exceed 20% by 2025, life insurance firms are increasingly identifying senior housing and nursing facilities as new growth opportunities.

Recent reports indicate that the number of registered residents aged 65 and older in South Korea surpassed 10 million in July 2024, accounting for 19.5% of the total population of over 51 million. If the current trend continues, South Korea will officially transition into a super-aged society next year, just seven years after entering an aged society.

As the elderly population grows, there is a rising demand for age-friendly housing and support services, including nursing care. A survey conducted by the Insurance Research Institute revealed that 72% of healthy middle-class seniors would consider using elderly care housing if available near their current residence. However, the current supply of such facilities is limited, with only 40 elder care homes and 9,006 units nationwide, and monthly fees in the metropolitan area exceeding 3 million KRW.

In light of this growing demand, insurance companies are prioritizing the elderly care sector as a new revenue stream. Notable companies such as KB Life Insurance and Shinhan Life Insurance are leading the charge. KB Life has established its subsidiary, KB Golden Life Care, to manage nursing facilities and has plans to open additional care homes in 2025. Shinhan Life launched Shinhan Life Care earlier this year and aims to open new facilities in Hanam and Eunpyeong by 2027.

However, the requirement for insurance companies to own both land and buildings presents a significant barrier to entry. Only financial holding companies and large insurers with substantial initial investment capacities are able to navigate these regulations effectively. Companies like Hana Life and Samsung Life are also exploring opportunities in the elderly care market, with task forces dedicated to this sector.

Experts caution that while entering the elderly care industry presents significant opportunities, the high initial investment costs and the potential for regulatory changes pose risks to profitability. Moreover, as this sector relies heavily on reputation, any adverse incidents could severely damage an insurance company’s image.

As South Korea nears the milestone of becoming a super-aged society, insurance companies are positioning themselves to capitalize on the burgeoning elderly care market. While the path is fraught with challenges, the potential rewards make it a compelling area for growth and innovation. The future will likely see increased competition among insurers as they strive to establish themselves in this vital industry.