KB Golden Life Care’s elderly care facility located in Seoul's Seocho District / Courtesy of KB Life Insurance
Insurers are weighing entry into therapidly expanding senior care sector, including nursing homes and long-term care facilities, but regulatory requirements that mandate operators own the land and buildings used for such facilities are emerging as a major hurdle, industry officials said Thursday.
According to the Ministry of Data and Statistics, the share of people aged 65 and older surpassed 20 percent of the population in 2025 and is projected to approach 30 percent by 2035. As Korea transitions deeper into a super-aged society, demand for long-term care services is expected to surge, prompting life insurers to explore the sector as a potential new growth engine.
Despite the rising demand, only a handful of insurers affiliated with financial holding companies have entered the business so far. Most insurers remain cautious, largely because the regulatory framework creates high entry barriers by requiring heavy upfront investment in property ownership.
Under the enforcement rules of the Welfare of Senior Citizens Act, businesses operating nursing facilities with 10 or more residents must own the land and buildings used for the facility, or lease the site exclusively from the central or local government. The rule was introduced to prevent excessive expansion of care facilities, abrupt shutdowns and housing instability for elderly residents.
Industry estimates indicate that establishing a nursing home with around 100 beds requires between 50 billion won ($34 million) and 60 billion won in capital. The financial burden is particularly steep in the Seoul metropolitan area, where land prices are among the highest in the country.
“Acquiring land in locations convenient for family visits requires enormous funding,” an official at a large life insurance company said. “Even with such an investment, maintaining profitability is difficult, which leaves companies little choice but to raise monthly fees per resident.”
Industry officials say operators should be allowed to lease land and buildings under certain conditions while still ensuring the safety of residents and maintaining service standards. They argue that easing the ownership requirement could lower entry barriers, encourage more players to enter the market and ultimately improve competition and service quality.
The government acknowledges the industry’s concerns, but discussions on regulatory reform have made little progress due to opposition from existing operators in the care facility market.
“The Korea Life Insurance Association has already raised the issue during meetings with the Financial Supervisory Service,” another industry official said. “The association has also continued submitting proposals to lawmakers, regulators and other relevant institutions.”
Source: Korea Times News
