South Korea Life Insurers Faces Declining Sales

South Korean life insurers are facing declining sales, as demand for new policies fell amidst a shrinking population and an aging society. According to statistics from the Korea Life Insurance Association (KLIA), the number of new life insurance contracts in the first half of 2026 totalled 4,112,902, down 12.9% from the first half of last year. New contract premiums also fell 6.8% over the same period to KRW744.37bn ($519m).

The KLIA statistics reveal that the overall decline in new contracts was largely driven by weak sales of protection-type insurance products. In the first half 2026, new protection-type insurance contracts totalled 3,869,319, down 13.4% from a year earlier, far exceeding the decline in savings-type insurance (-3.6%). New contract premiums also fell 5.9% to KRW632.07bn.

On the other hand, the base for new subscriptions shrank due to population decline from low birthrates and aging, while new demand itself fell as insurance subscription rates had already reached high levels.

Protection-type insurance sales also contracted on a first-year premium basis. From January to April 2026, first-year premiums for individual protection-type insurance totalled KRW489.2bn, down 22.0% from KRW627.2bn a year earlier. First-year premiums for whole life insurance, the flagship product, fell 11.3% from KRW264.5bn won to KRW234.6bn, while disease insurance fell 20.4% from KRW97.8bn won to KRW77.9bn.

The slump in the core business has also affected earnings. In the first half of 2026, net profit in the insurance divisions of the five major financial holding companies totalled KRW1.118 tr, shrinking 21.0% from a year earlier.

4 Main Reasons Insurer/Takaful Rejected Claim

While every contract is unique, most claim rejections stem from a handful of recurring issues.

Policy Exclusions and Limitations
Claimants often assume their coverage is all-encompassing, but it rarely covers everything. Rejections often happen because the specific treatment or condition is explicitly excluded in the policy, such as certain cosmetic procedures or “experimental” treatments.

One of the more common areas of dispute concerns the interpretation of what constitutes “medically necessary” treatment. While a procedure may be recommended by a treating doctor, the insurer may decline the claim if its medical assessors determine that the treatment falls outside the policy’s definition of medical necessity, such as where it is considered optional, cosmetic, or non-essential.

Certain pre-existing illnesses or hospital admissions are primarily for investigation or diagnostic check-ups rather than active treatment. Not every treatment recommended by your doctor will be covered under your policy.

Non-conformance with Terms and Conditions (Breach of Conditions)
Many insured believe that once they have paid their insurance premiums, any loss or medical expense will automatically be covered. However, insurance policies operate within a framework of terms and conditions that policyholders should understand. Claims can be declined where those requirements are not met.

For example, a motor accident claim may be declined if the vehicle was driven by an unauthorized or unlicensed driver, while a medical claim for a non-emergency elective procedure may not be covered if prior approval or a Guarantee Letter (GL) was required but not obtained.

Similarly, a burglary or water damage claim may be declined if the property remained unoccupied for a period exceeding the period allowed under the policy and the insurer was not notified as required under the policy terms. These seemingly small oversights can result in a rejected claim, even when the loss is genuine.

The same applies to reporting timelines. If your policy says you must report an incident within 14 days, waiting two months to do so can give the insurer grounds to reject your claim because they can no longer conduct a proper investigation.

An insurance policy is a two-way contract; if you fail to fulfil your part of the agreement, the insurer is not obligated to pay out.

Non-disclosure and Misrepresentation
Insurance is based on the principle of “utmost good faith.” Put simply, it means that insurers rely on consumers to provide complete and accurate information when applying for coverage.

By signing the application form, you are confirming that you have disclosed all material facts, including any information that may affect the insurer’s assessment of the risk and its decision to offer coverage.

Policyholders frequently do not disclose certain symptoms because they consider them insignificant or unrelated to their insurance application. A person may dismiss a recurring cough or a previous episode of back pain as minor issues, particularly if no formal diagnosis was made. However, such information may still be material to the insurer’s risk assessment and should be disclosed when required.

When you make a medical claim, insurers will review the information you provided when you first bought your policy. If a pre-existing condition was not disclosed, even by mistake, it could affect your claim and your coverage.

In more serious cases, non-disclosure may affect the validity of the policy or impact a person’s ability to obtain insurance coverage in the future. This underscores the importance of providing a complete and accurate medical history at the outset.

Failure to take reasonable precautions in safeguarding the vehicle
We often hear the phrase “just for a while”. Whether you are going to a 7-Eleven or waiting at an ATM, leaving your car engine running with the keys inside is a recipe for trouble.

This is often classified as a “failure to take reasonable precautions.” While it may feel like a minor lapse in judgment, your insurance contract specifically requires you to take all reasonable steps to protect your vehicle from loss or damage.

If you leave your car unlocked, the engine running, or the keys in the ignition, you are making it too easy for a thief. In such scenarios, the insurer is well within their rights to reject the claim, as the theft was not an unavoidable accident, but a direct result of the policyholder’s own negligence.

Similarly, most travel policies require you to take “reasonable precautions” with your belongings. If you leave your luggage unattended in a café or airport lobby and it is stolen, your insurer may reject the claim because you failed to keep your belongings under your supervision, breaching the policy’s duty of care clause.

The “safeguarding” clause is there for a reason, and insurers expect you to treat your vehicle and belongings with the same caution you would expect of any owner.

Takaful Policy - Void On Deliberate Fraud

The High Court in Ipoh has ruled that Zurich Takaful Malaysia Bhd was entitled to void a family takaful policy after finding it was obtained through deliberate fraud, despite failures by the insurer’s own agent to follow basic underwriting procedures.

Agent Negligence - It was revealed in court that the agent admitted that he had never met the insured, witnessed the signing of the proposal form, or verified the information submitted before the policy was issued. However, the judge said these failures did not invalidate the contract as Zurich Takaful had accepted the proposal, issued the certificate and collected RM3,000 in contributions. 

The judge said an insurer could not rely on its agent’s negligence to escape contractual liability. However, the judge found that the policy had been obtained through deliberate and coordinated misrepresentations by the nominee, allowing Zurich Takaful to void the contract under Schedule 9 of the Islamic Financial Services Act 2013.

Zurich Takaful filed the suit after rejecting a claim following the death of the insured in a bicycle accident in April 2018, about six months after the policy was issued. The insurer alleged that the proposal form contained false declarations regarding the deceased’s marital status, occupation, income, address, literacy, alcohol consumption and relationship with the nominee. 

The nominee denied the allegations and filed a counterclaim for the policy proceeds. In his 39-page judgment, the judge said evidence, including another takaful policy with similar fabricated family relationships, pointed to a fraudulent scheme rather than innocent mistakes.

The judge found it highly unlikely that the insured, who remained married and supported his wife and five children, would have excluded them and nominated a distant relative to receive more than RM800,000 in takaful benefits.

The judge concluded that the proposal form was likely completed by the nominee to ensure the policy proceeds would be paid to him.

Fraudulent Application - Although Zurich Takaful also questioned the circumstances surrounding the insured's death, the judge declined to find that the nominee had committed any criminal offence, noting that police had classified it as an accidental death. The judge said that the claim failed because of the fraud committed when the policy was obtained.

The court also rejected allegations that Zurich Takaful’s former solicitors conspired with the insured’s widow to fabricate evidence, saying there was no proof despite concerns over how confidential policy documents came into her possession.

Allowing Zurich Takaful’s claim, the judge declared the policy validly voided, dismissed Yathavan’s counterclaim and ordered the insurer to refund the RM3,000 contribution to insured’s lawful widow. He made no order as to costs, saying the case should never have reached court because the insurer’s own agent had abandoned basic underwriting safeguards in pursuit of a quick commission.

Indonesia Medical Cost Inflation Year 2025 -13.5%

Indonesia's health insurance sector is under sustained pressure from medical inflation running well above general price increases, a trend that is reshaping underwriting economics and drawing direct regulatory intervention.

Medical cost inflation in Indonesia reached an estimated 13.6% in 2025, the highest rate in Asia, according to the Global Asia Insurance Partnership (GAIP). Mercer Marsh Benefits, meanwhile, put the country's projected medical trend rate at 19% for 2025, the year-on-year increase in claims costs per insured person. Asia-Pacific has recorded double-digit medical trend rates for six consecutive years, with analyst projecting a 12.5% average rate across the region in 2026.

Product exits signal unsustainable claims ratios - The gap between claims costs and premiums has already forced product exits. Around five to six non-life insurance companies stopped selling health products by early 2026, according to the Indonesian General Insurance Association (AAUI). Claims ratios had consistently exceeded 90% across parts of the market, a level that Indonesia's Financial Services Authority (OJK) acknowledged was unsustainable.

The structural drivers are well established. Rising utilization, an ageing population, and the growing burden of non-communicable diseases such as diabetes and hypertension are all contributing to cost escalation. The devaluation of the Indonesian rupiah (IDR) compounds pricing pressure, as most pharmaceutical raw materials and medical devices are sourced from abroad.

Anaalyst projects gross claims in the personal accident and health (PA&H) segment to grow from IDR8.6 trillion (US$535.9 million) in 2025 to IDR13.1 trillion (US$816.3 million) by 2029. That represents a compound annual growth rate of 10.9%.

Reinsurers carry share of deteriorating books - For reinsurers, the deteriorating claims environment creates direct exposure through quota share and excess-of-loss arrangements on health books. As cedants face pressure on guaranteed-premium products, where in-force policies cannot be repriced without regulatory constraints, reinsurers absorb a proportional share of the adverse experience.

Asia's health protection gap reached US$258 billion in premium-equivalent terms in 2024. That was up 21% from 2017, with chronic conditions and critical illnesses contributing almost equally to household financial stress.

OJK introduces co-payments and repricing limits - The OJK moved to address the imbalance in late 2025. Its POJK No. 36 of 2025, effective January 2026, introduced mandatory co-payments of at least 10% of each claim. The cap is IDR300,000 for outpatient care and IDR3 million for inpatient treatment.

The regulation also restricts health product repricing to once per year, with mandatory written notice to policyholders at least 30 days in advance. The OJK said the measures were intended to curb overutilization and prevent moral hazard.

Insurers have until December 2026 to adapt existing products to the new requirements. The framework also mandates medical advisory boards and stronger utilization review processes.
The requirements raise the operational bar for smaller carriers already under capital pressure.

Reinsurance role extends beyond risk transfer - Indonesia Re, the state-owned national reinsurer, has described the reinsurance function in this environment as extending beyond risk transfer. It cites claims experience analysis, disease trend monitoring, portfolio profitability assessment, and technical support for rate setting as areas where reinsurers add value.

The private health insurance market remains relatively small against a large state base. By October 2025, 283 million participants held coverage under BPJS Kesehatan, the national scheme, representing 99.3% of the population.

Private products largely serve as supplementary cover for access to private hospital facilities and specialist services. The private market was valued at US$1.63 billion in 2025 and is projected to reach US$2.54 billion by 2031, a 7.5% compound annual growth rate.

The regulatory and structural changes are expected to improve claims ratios over time but introduce near-term complexity for both insurers and reinsurers. Tighter co-payment rules may suppress utilisation. The underlying cost trends driven by chronic disease, medical technology, and currency exposure remain structural rather than cyclical.

The period ahead is likely to involve closer collaboration with cedants on product design, more granular pricing assumptions, and greater scrutiny of claims management governance. Those conditions typically favor reinsurers with strong local data infrastructure and cedant relationships over those writing the line from a distance.

Malaysia MediAsas

The government will launch a pilot program for its Base Medical and Health Insurance and Takaful (MHIT) plan in the Klang Valley by the end of July, with monthly premiums expected to start from around RM60.

Knowns as MediAsas, it will be offered as a standalone medical insurance and takaful protection plan with two product options — MediAsas Teras (a standard plan) and MediAsas Fleksi (a standard-plus plan). The scheme will provide medical coverage for individuals up to the age of 85.

The premiums will be determined based on the latest medical claims experience and healthcare cost inflation trends, with indicative premiums expected to remain within the target monthly range of around RM60 to RM550 for individuals within the entry age of up to 70 years. 

Final pricing will be confirmed before the nationwide implementation in January 2027. The pilot phase will run from end-July until October 2026.

Six insurers and takaful operators will participate in the pilot program togrther with selected hospitals in the Klang Valley. They include AIA Bhd, Allianz Life Insurance Malaysia Bhd, Great Eastern Life Assurance (Malaysia) Bhd, Prudential BSN Takaful Bhd, Etiqa Family Takaful Bhd and Syarikat Takaful Malaysia Keluarga Bhd.

The government said the pilot program will test "operational readiness, including systems integration, customer experience and operational processes" in a controlled environment. Feedback gathered during the pilot phase will be used to refine implementation arrangements before the nationwide rollout.

The Base MHIT initiative forms part of the government's broader Reset strategy, undertaken jointly with Bank Negara Malaysia, to address rising medical inflation and strengthen the long-term sustainability of Malaysia's healthcare system.

The strategy focuses on value based healthcare in improving patient outcomes, optimizing cost-effective healthcare services and enhancing access to quality care.

FWD Launched Cancer MultiCover Insurance

FWD Singapore has launched FWD MultiCover CI, a new critical illness policy designed to provide ongoing payouts rather than terminating after the first claim. The product launch comes as national figures show Singapore’s five-year cancer survival rate rose from 53% in 2008 to 2012 to 61% in 2019 to 2023.

Over the same period, cancer mortality dropped from 91 to 72 deaths per 100,000 people.
With patients living longer post-diagnosis, the insurer aims to help families cover long-term income loss, caregiving expenses, and prolonged recovery costs.

The policy covers up to 166 medical conditions across early, intermediate, and late stages. Depending on specific condition limits, policyholders can claim up to a total of 900% of their Sum Insured across all benefits.

Under the core Critical Illness Benefit, customers can make up to six claims totaling 600% of the Sum Insured, with a one-year waiting period between claims.

Early and intermediate stages pay out 100% of the Sum Insured, whilst late-stage diagnoses pay 200%.

For specified late-stage illnesses or recurrences, a Booster Benefit offers an additional 150% of the Sum Insured per claim for up to two claims, subject to a two-year waiting period.

Customers facing late-stage diagnoses can also select the Accelerated Care Option to receive an immediate 75% payout instead of keeping the booster benefit for future recurrences.

Additionally, a two-tier Intensive Care Unit benefit provides payouts up to 120% of the Sum Insured for severe hospital stays, even if the underlying illness is not listed as a critical condition.

Check Unclaimed Money Through Semak Kasih

Bank Negara Malaysia (BNM) today launched the ‘Semak Kasih’ portal to make it easier for beneficiaries to check unclaimed insurance policies or takaful certificates of their family members. The portal was developed to help beneficiaries verify whether they have insurance or takaful coverage and contact the relevant provider for further action.

Approximately 50,000 insurance policies and takaful certificates involving death benefits have yet to be claimed by beneficiaries. Several efforts have been undertaken by insurance and takaful companies, including sending letters and using agents to contact beneficiaries.

To improve the efficiency of the benefit claim payment process, this newly launched portal makes it easier for beneficiaries to check the existence of coverage and contact the relevant provider for further action to ensure that benefits reach the qualified family members.

Malaysians should strengthen financial protection through insurance or takaful, as well as increase their financial literacy to face economic challenges and the rising cost of living. Insurance or takaful protection can help individuals and families when facing disasters such as illness, accidents, or fires, and help ensure the welfare of surviving family members