enter title here...some facts about south korea • official country name: republic of korea • an...

August 2020

James Park

Senior Vice President

Seoul

Korea Overview

2MERCER MARSH BENEFITS

Introduction

James Park, Korea

James Park is Korea GBM leader based in MMB’s Korea office.

Current Responsibilities

• As the Global Benefits Management Leader in Korea, James is

responsible for the delivery of Employee Health & Benefits services in

Korea for major MNCs.

Past Responsibilities

• James has worked at Marsh Korea since 2007 and holds the position

as senior vice president in Employee Health & Benefits Unit. He has

12 years of experience in the U.S. working with insurance brokerage

consulting firms in the employee benefits field. Prior to joining Marsh

Korea, he was with Aon Korea. He has been involved in managing

multinational clients and brings with him the valuable knowledge of

U.S. benefits and broking services.

Education

• James holds a Bachelor’s degree in Business Administration from

Pepperdine University in Malibu, U.S.A.

JAMES PARK

Senior Vice President


Korea Overview

Agenda

about Korea

01 02 03

04 05

Demo-

graphics

Market

Landscape

COVID-19Market

Practice &

Prevalence

06Local

Capabilities


What comes to your mind when you think of Korea?


Some Facts about South Korea

• Official Country Name: Republic of Korea

• An East Asian nation on the southern half of the Korean Peninsula, shares one of the world’s most heavily militarized borders

with North Korea.

• Capital: Seoul

• Currency: South Korean won

• Language: Korean

• Korean alphabet: Hangul (한글), the native script of Korea, created in the mid fifteenth century by King Sejong.

• Hosted 1988 Seoul Summer Olympics, 2002 FIFA World Cup, 2018 PyeongChang Winter Olympics

• The first country to adopt and launch 5G network in April 2019.

• Seoul ranked 4th most expensive city for expats after Hong Kong, Tokyo, and Singapore and ranked 7th most expensive city to

live in (2019).


• Population: 51.23 million

• Life expectancy: 82.92 years, a 0.18% increase from 2018.

• Birth rate: 7.303 births per 1000 people, a 1.79% decline from 2018.

• GDP for 2018: 2.126 trillion USD (12th ranking).

• Inflation rate (2018): 1.48%, a 0.47% decline from 2017.

• Healthcare spending (2016): USD 2,044 (current expenditures on health per capita),

a 6.09% increase from 2015.

• Unemployment rate: 3.0% (Oct. 2019)

Sources: Macrotrends, KOSTAT

Korea Overview

Demographics


• The Korean insurance market is one of the biggest insurance markets in the world. Korea is the seventh

largest market by total premium income and fifth by premium to GDP (2017 Swiss Re study). The industry

sector is comprised of insurers conducting life insurance business, non-life insurance business and accident

and health insurance.

• One of the 4 social programs in Korea is National Health Insurance (NHI). Others are National Pension,

Workers’ Compensation, and Unemployment Insurance.

• NHI covered medical costs are classified as Statutory. Costs not covered by NHI are Non-statutory. Non-

statutory covers are generally associated non-essential treatments such as preventive cares, cosmetic

purposes, and etc.

– NHI covers 80% of the statutory medical cost for “Hospitalization” reimbursement.

– NHI covers 40~70% of the statutory cost for “Outpatient” reimbursement.

• What is not covered by NHI for statutory and non-statutory will be covered by group insurance.

• About 75% of multinational and local leading companies provide supplemental medical benefits in Korea.

– Benefits provided by Social Security coverage (National Health Insurance) is considered inadequate as

individual must still assume 45% to 55% of total medical expense.

– NHI contribution: Employee and Employer equally contribute about 3.5% of BMS

Korea Medical Benefits

Market Landscape


• Typical medical benefits provided are hospitalization, outpatient expenses and cash benefits.

– Actual medical expense up to KRW 10mil. (USD 8,850) per hospitalization case (per cause) per year

– Actual outpatient expense paid up to KRW 300K (USD 265) per visit inclusive of prescriptions

– Cash paid benefits on critical illness, cancer and inpatient daily allowance

• Employee contribution: None for both employee and dependent coverage (Employer pays the full cost of the plan for

Employee and Dependents)

• Premium rates are tariff-rated per regulation.

– The rates are not negotiable but determined by age, gender and other risk factors.

– The actual loss ratio does not impact the renewal premiums as the premium rates are tariff-rated in Korea.

However, insurers may decline the renewal contract or include additional rider by mandate with a result of a high

loss ratio in order to renew to policy contract.

• Retirement is non-insurable benefit and the consulting work will be led by Mercer Korea.

• Flex benefits (non-insured) not prevalent

• Annual renewal process; 3 months in most cases

• Korea is highly regulated insurance market with not much flexibility on medical plan design and terms & conditions.

2020 MMC FX Rate: USD1 = KRW1,165.68 / EUR1 = KRW1,293.90

Korea Medical Benefits

Market Landscape (cont’d)


Market Practice & Trends - Benchmarking Results

Mercer Benefits Prevalence Report 2019_All Industries

Benefit% of Employer Providing

Benefits

Benefit Level

Market Practice - median

Insured amount Insured

Life Disease Death 91% Annual Salary x 2.5 Employee

Personal Accident Accidental Death 93% Annual Salary x 3 Employee

Accidental Disability Annual Salary x 3 Employee

Medical Diagnosis (Critical Illness / Dreaded Disease)

Cancer Diagnosis 68% 20mil Employee

2 Critical Illness Diagnosis 20mil Employee

Medical Hospitalization 90% 10mil max. Employee

SpouseChild(ren)

Nursing Care *

(Hospitalization Daily Allowance)

70% 30K per day Employee

SpouseChild(ren)

Outpatient 82% 300K max. Employee

SpouseChild(ren)

* Marsh Korea data, 2019 (based on around 570 clients of MMB Korea)


Market Practice & Trends - Benchmarking Results

Mercer Benefits Prevalence Report 2019_APITT (High Tech)

Benefit% of Employer Providing

Benefits

Benefit Level

Market Practice - median

Insured amount Insured

Life Disease Death 96% Annual Salary x 3 Employee

Personal Accident Accidental Death 62% Annual Salary x 3 Employee

Accidental Disability Annual Salary x 3 Employee

Medical Diagnosis (Critical Illness / Dreaded Disease)

Cancer Diagnosis 72% 20mil Employee

2 Critical Illness Diagnosis 20mil Employee

Medical Hospitalization 91% 10mil annul max. Employee

SpouseChild(ren)

Nursing Care * (Hospitalization Daily Allowance)

72% 30K per day Employee

SpouseChild(ren)

Outpatient 85% 300K max. Employee

SpouseChild(ren)

* Marsh Korea data, 2019 (based on around 190 high-tech clients of MMB Korea)


Summary of Benefits (sample)

Line of Benefits Coverage Detailed Benefits

Life Disease Death Death or +80% of disability as a result of disease

AD&D

Accidental Death Death as a direct result of accident

Accidental DisabilityIn case of disability as a direct result of accident

- 100% ~ 3% of insured amount will be paid according to disability degree

Diagnosis

2 Critical Illness Diagnosis Diagnosis defined as Cerebral Hemorrhage & Acute Myocardial Infarction

Cancer Diagnosis

Newly diagnosed as defined cancer

- Thyroid Cancer, Borderline tumor: 30%

- Carcinoma in situ & other cutaneous cancer: 10%

Medical

Hospitalization Reimbursement

Hospitalization incurred due to disease, accident or maternity which is treated as covered benefits by NHI covered

benefits (statutory) will be covered at 90% and NHI’s non-covered benefits (non-statutory) will be covered at 80%

based on actual medical expenses for the portion responsible by an individual.

- Room expenses: 50% up to 100K daily max.

Nursing Care

(Hospitalization Daily Allowance)

In case of hospitalization due to disease, accident or maternity if applicable to National Health Insurance (NHI),

insured amount per day will be paid during the policy period.

Outpatient Reimbursement

Doctor’s visit due to accident or disease which is covered under NHI, the actual medical expense incurred will be

paid at 100% after applying following deductible amount.

- 250K max for doctor’s visit charges / 50K max for prescriptions

- Maternity benefits excluded (by Life Insurer)

Greater amount applies as deductible:

NHI Statutory x 10% + NHI Non-statutory x 20% or

Doctors Visit: Clinic: 10K / Small Hospital: 15K / General Hospital: 20K

Prescriptions: 8K

Specific Treatments

Chiropractic, extracorporeal shock wave therapy (ESWT), prolotherapy, non-statutory injection and MRI/MRA

treatment incurred by both hospitalization and outpatient which is treated as NHI non-statutory will be covered at

70% based on actual medical expenses for the portion responsible by an individual

- Chiropractic, ESWT, Prolotherapy: up to KRW 3.5mil. per year (50 visits max)

- Non-statutory injection: up to KRW 2.5mil. per year (50 visits max)

- MRI/MRA: up to KRW 3mil. per year


Coverage Comparison

Life Insurer vs. Non-Life Insurer

Coverage Life Insurer Non-Life Insurer

Disease DeathSuicide covered if enrolled for minimum of 2 years

for the Disease Death cover.Cannot cover suicide.

2 Critical IllnessCerebral hemorrhage & acute myocardial infarction

covered.

Stroke & acute myocardial infarction covered.

Covers broader definition for stroke.

Can also cover cerebrovascular accident (CVA) and

ischemic heart disease (IHD) for broader coverage

with enhancement to the rider.

Outpatient

Maternity not covered. Covered only in the event of

medical complications that require medical

treatments.

Maternity covered. General prenatal and postnatal

healthcare services covered.

HospitalizationNon-statutory medical expense not covered for

dental & oriental medicine treatment

Non-statutory medical expense covered for dental &

oriental medicine treatments.


• Benefits arising from the coronavirus: The government fully sponsors for all expenses related to the screening of

suspected cases and treatment of those infected from admitted to a medical facility until discharged.

• Is COVID testing available privately? No, testing is available at designated screening centers only.

• Are there new insurance coverages available? Employers may recommend utilizing an EAP program. The

government website is also available for psychological counseling, self-examination, and education. National Center

for Disaster Trauma: https://nct.go.kr/

• What special measures are being taken / considered to support the return to work? Employers recommend staying

home for 3 to 4 days if employees get sick, avoid traveling or seek for an approval prior to any travelling plan and

offer flexible working hours. Offering flexible working hours and utilize personal leaves when employees are not

feeling well are emerging ways of work adopted by companies. Manager and HR will speak to employees who are

still has concern on return to work and agree on workaround.

• South Korea government has adopted three levels of social distancing and countermeasures, depending on the

severity of the COVID-19 outbreak.

• Level 1 social distancing, which is implemented when the number of virus cases is manageable by the medical

system. The government plans to apply Level 2 distancing measures if daily infections exceed 50 for 14 straight days

but remain below 100, and Level 3 measures if daily infections far exceed 100.

• Under Level 2, all private and public indoor meetings of 50 or more and outdoor meetings of over 100 will be banned.

Under Level 3, all meetings of 10 people or more will be banned and all students will be prohibited from going to

schools, the health agency said.

Korea Overview

COVID-19

https://nct.go.kr/


• No pre-package insurance offering due to market regulation (e.g., Mercer Elect, Benefit One)

• MMB Korea Fixed Fee Structure

– USD 3,750 per annum (the minimum fee reduced for commissions received)

– Minimum headcount: 10 employees (with covering dependents for medical coverage)

– By client (based on same renewal date and coverage)

• Dental is not market prevalent; only available for group size over 100.

– Treatment such as Prosthetics (implant, bridge, dentures) & Preservations (resin, inlay/onlay, crown) will

be covered with fixed insured amount.

• No vision products available

• LTD now available for group size over 100

• Available pooling

– Generali via Kyobo Life

– IGP via Samsung Life

– Zurich via AIA

– Swiss Life via Hanwha Life (limited underwriting)

Korea Overview

Local Capabilities


IMPORTANT NOTICE: This document does not constitute or form part of any offer or solicitation or invitation to sell by either Marsh or Mercer to provide any regulated

services or products in any country in which either Marsh or Mercer has not been authorized or licensed to provide such regulated services or products. You accept this

document on the understanding that it does not form the basis of any contract.

© 2019 Marsh Korea, Inc. | 201-81-44013. All rights reserved.

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