KIDI Advances Development of Cost Variation Index for Auto Insurance

Director Kangho "Will Enhance Understanding of Factors Affecting Insurance Premium Increases and Decreases"

Kangho, President of the Korea Insurance Development Institute

[Asia Economy Reporter Oh Hyung-gil] The Korea Insurance Development Institute has decided to develop an 'Automobile Insurance Cost Index' this year to make it easier for consumers to understand the cost fluctuation trends of automobile insurance.

Kang Ho, President of the Insurance Development Institute, stated in a press release on the 11th, "We will actively support solving the problems of automobile insurance, which recorded a historic level of operating losses last year, and indemnity medical insurance, which is threatened in sustainability due to continuous deterioration of loss ratios."

The automobile insurance cost index, which reflects cost fluctuations such as medical expenses, repair costs, and parts costs, will contribute to increasing public understanding of the factors for automobile insurance premium increases or decreases and forming a social consensus on appropriate premium levels, President Kang added.

Additionally, the Institute plans to conduct research to establish "objective and rational compensation standards for personal injury" in minor vehicle accidents related to automobile insurance. This will include academic studies, occupant accident reproduction tests, hosting international seminars, statistical analysis of minor accident treatment cost payments, and promoting the establishment of "International Standards for Minor Accident Bodily Injury Risk."

President Kang explained, "Although the 'Minor Damage Repair Standards' were established and implemented in 2016 in the automobile insurance standard terms and conditions, it is necessary to establish objective and rational compensation standards for personal injury damages such as settlement amounts related to minor accident personal injuries."

Regarding indemnity insurance, plans are in place to support restructuring of indemnity medical insurance products and management measures for non-reimbursable expenses. The Institute will provide current status and analysis data on non-reimbursable medical expenses and continue to analyze and raise issues regarding excessive claims for non-reimbursable treatments.

The Institute also plans to support the growth potential and market activation of the health insurance market for the chronically ill by expanding the scope of insurable chronic patients and supporting related product development using major disease prediction models jointly developed with Seoul National University.

Joint infrastructure for cost and operational efficiency of insurance companies will also be established. The Institute plans to enhance field applicability by developing additional functions reflecting actual user demands and improving system accuracy for the 'Automobile Insurance Loss Assessment Support System (AOS Alpha)' using artificial intelligence (AI) technology developed last year.

In preparation for the new International Financial Reporting Standard (IFRS17), the Institute will add modifications and advance system performance for the 'ARK System,' jointly developed with 10 insurance companies. In line with the growth of the pet insurance market, they are also preparing to strengthen the functions of the 'Pet Medical Expense Claim System (POS),' which was first established last year.

President Kang said in the press release, "The insurance industry is experiencing deterioration in growth and profitability due to low interest rates and low growth, and is facing double difficulties due to capital expansion burdens from the introduction of IFRS17 and the new solvency regime (K-ICS). We plan to provide optimal consulting services institutionally and practically so that insurance companies can respond flexibly."

This content was produced with the assistance of AI translation services.