Employee insurance and benefits insights 2022 – Korea

Johnny Lee, Mercer Marsh Benefits leader of Korea shares his insights on how employers can lower their business claims ratio in a bid to secure more competitive premiums, achieve better claims performance through flexible benefits, and strategise to build and attract a healthier workforce while successfully managing costs.

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Medical inflation in government and supplemental covers

According to the latest Marsh Mercer Benefits (MMB) Health Trends report, Asia’s medical trend rate is expected to increase 10% in 2022. This upward pressure on pricing for group health insurance programs is certainly felt in the Republic of Korea, where the individual salary contribution for the government’s medical insurance rose from 6.24% to 6.99% — a 12% increase.

With the recent government health coverage expanding to include costlier services such as MRI scans, medical claims have increased 20%, leading to a 7.5% inflation for premiums on supplemental benefits. Amidst this backdrop, many employers are turning to brokers to seek solutions to lower their businesses’ claims ratio.

Achieving better claims performance through flexible benefits

While partnering with a broker is vital to finding a good carrier, negotiating better coverage, and securing more competitive premiums, employers in Korea are also discovering that a broker can provide advice on what they can do to improve claims performance.

For MMB Korea, a common way this is achieved is by enabling our clients to provide employee medical choice, which gives employees flexibility in their choice of medical coverage. This is a change to what is commonly practiced in Korea, where most companies offer individual and group employee policies that do not allow the employee to benefit from the other policy once they have made their choice. By offering employee medical choice, those with individual policies can opt to use their company’s group policy, which often results in an overall lower claims ratio.

Greater emphasis on preventive health and mental care a possibility

In Korea, preventive care has largely been under the remit of the government. However, we are observing the beginnings of privatised offerings of preventive care, with the government’s recent authorisation of two private carriers to offer mental wellbeing and preventive medical treatment products and services through digital platforms.

For now, it is still too early to see the effectiveness and positive impacts of the products and services. In the meantime, insurers are adopting a wait-and-see approach and waiting to quantify and define the value these products and services will bring before incorporating these new offerings into their policies.

What’s next for employers in Korea

With treatment well taken care of by the government, companies should still adopt a proactive approach in offering webinars and use robust communication to support their employees’ health and wellbeing.

By curating and adopting preventive healthcare, treatment and post-treatment solutions that employees want and benefit from, employers in Korea can build and attract a healthier workforce that consistently performs to their full potential, and in the process gain a valuable competitive advantage over their counterparts while effectively managing their employee insurance costs amid rising pressures.