The Stagnation of 'Simplified Actual Expense Insurance Claims'... The Unvarnished Reality of Innovation-Lagging Korean Insurance

US and Japanese Insurers Lead Digital Innovation
Insurance Business Act Amendments Repeatedly Stalled in National Assembly
"21st National Assembly, an Opportunity to Overcome Medical Sector Opposition"

[Asia Economy Reporter Oh Hyung-gil] Simplification of claims for indemnity health insurance, known as the "second health insurance," has been at a standstill for several years, but full-scale discussions are expected to begin in the National Assembly as early as next month, drawing attention to the outcome.

The simplification of indemnity insurance claims, which failed to pass even in the 20th National Assembly due to complex conflicting interests surrounding the system's introduction and ultimately stalled, is regarded as a representative case showing the limitations of domestic InsurTech (a combination of insurance and technology) growth.

Political circles, civic groups, and the insurance industry are urging improvements for consumers' convenience in the insurance claim process, but the key issue is how to overcome the persistent opposition from the medical community.

According to the ruling party and the insurance industry on the 8th, the amendment to the Insurance Business Act, which includes the simplification of indemnity insurance claims, is expected to be discussed in the National Assembly as early as next month. With the formation of the National Assembly's Political Affairs Committee completed last month, proposals for amendments to the Insurance Business Act are being submitted one after another. Assemblyman Go Yong-jin of the Democratic Party of Korea, who prepared the amendment for indemnity insurance claim simplification in the 20th National Assembly, and his party colleague Assemblyman Jeon Jae-su are reviewing the bill proposal.

The simplification of indemnity insurance claims mainly involves insurance companies building a computerized system for claims, and hospitals sending medical expense certification documents in electronic form upon the patient's request. Currently, to claim indemnity insurance benefits, patients must visit hospitals to obtain medical receipts and submit them to insurance companies via fax, email, or smartphones, which is cumbersome.

The medical community strongly opposes this. They argue that providing patient information to insurance companies could lead to personal information leaks and that insurance companies might misuse the information by refusing enrollment or payment.

However, in the case of automobile insurance, a simplified system operates where hospitals claim medical expenses for traffic accident patients and insurance companies pay accordingly, so the grounds for opposition are generally considered weak. A more fundamental issue is that even the claim simplification is already lagging behind innovation.

In fact, insurance business models based on Fourth Industrial Revolution technologies are emerging one after another in advanced countries worldwide. Dai-ichi Life in Japan recently became the first major insurer to decide to sell all insurance products online. To subscribe to insurance, customers can consult with insurance planners via chat applications or video calls.

Similar to Korea, where face-to-face sales by planners were dominant, Dai-ichi Life quickly changed its sales strategy after the COVID-19 pandemic made face-to-face consultations difficult.

American InsurTech company Lemonade handles everything from insurance subscription to claims processing and payment online. By sending a video in the dedicated app saying, "I promise to claim insurance benefits honestly. I swear to act honestly," the insurance payment is deposited within three minutes. Due to this convenience, it is known that 27% of new insurance subscribers in New York, USA, have joined Lemonade.

An insurance industry official emphasized, "Innovative insurance products like those of American and Japanese insurers should also emerge domestically." Another industry insider lamented, "Digital innovation will be the key to whether insurance companies survive in the future," adding, "It is regrettable that even claim simplification cannot be achieved due to opposition from the medical community."

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