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Insurance companies are facing growing calls to develop products aimed at mental health care, as the number of people with mental health problems, such as depression and anxiety disorders, continues to rise.

However, insurance companies highlighted limitations, citing a significant structural issue. They noted that the subjectivity of mental health diagnoses can lead to moral hazard and complicates the validation of insurance claims.

The Korea Insurance Research Institute (KIRI) noted on Monday that Korea is struggling with issues such as a highly competitive atmosphere driven by rapid economic growth, intense pressure for education and increasing social isolation due to the rise in single-person households and longer job preparation periods.

As a result, mental health problems have become so common that one in four people experiences them at least once in their lifetime.

In particular, the number of patients suffering from depression increased by 35 percent — from 691,164 in 2017 to 933,481 in 2021 — while the average medical expense per person for this illness rose from 439,501 won ($336) to 564,712 won during the same period.

The government has emphasized the need to prioritize coverage for young people, considering that individuals in their 20s and 30s are the most vulnerable to mental health disorders and that various problems related to deteriorating mental health occur predominantly within these age groups.

In response, public insurance, such as the National Health Insurance Service, for its part, has gradually expanded coverage for mental illnesses, and private insurance companies also broadened their coverage through policy revisions in 2016.

However, relevant products remain limited as coverage is restricted to long-term hospitalization. Moreover, the majority of non-reimbursable treatments, which make up a significant portion of mental health care expenses, are not covered.

According to industry officials, one of the major factors hindering the expansion of mental illness coverage is the social stigma associated with mental illnesses, which leads to underreporting. This makes it difficult to gather sufficient actuarial data, posing challenges for designing insurance products.

In its report, the KIRI urged the government, insurers and employers to cooperate keenly to expand coverage for mental health problems and boost people's mental health.

"Insurance companies could consider developing tailored insurance products specifically designed for certain occupational groups," KIRI researcher Kim Kyeong-seon said.

"When developing new products, insurers should carefully adjust benefits based on domestic and international research findings related to mental illnesses. Additionally, they must implement measures to prevent moral hazard associated with specific symptoms."