Unending Insurance Disputes... Will an Independent Insurance Review Organization Emerge? (Comprehensive)

The Democratic Party Proposes Establishment of Traffic Accident Dispute Mediation Committee
Frequent Waivers of Disputes... Eliminating Unnecessary Social Costs
"Create an Independent Medical Advisory Body to Improve the Advisory System"

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] In October last year, Kim Se-jin (41, pseudonym), who was driving a passenger car near Suwon City, Gyeonggi Province, was involved in a traffic accident with a vehicle coming from the opposite lane. However, he experienced an absurd situation during the accident handling process. When the opposing driver, who crossed the center line, claimed that Kim deliberately collided with his vehicle even though Kim could have avoided it, the opposing party's insurance company refused compensation. Kim insisted that the accident occurred because the other vehicle suddenly swerved out, but the insurance company repeatedly responded that compensation was not possible.

Eventually, Kim filed for dispute mediation and recently received a conclusion that he was not responsible as the accident was caused solely by the other driver's fault. Kim said, "If I had not filed the dispute with the help of an acquaintance, I might not have received the insurance money as claimed by the other party and the insurance company," adding, "Although time and costs were spent resolving the dispute, I am relieved to have received a proper decision."

As disputes surrounding automobile insurance and insurance companies' medical consultations continue, there are calls to establish an independent organization or committee to objectively resolve these issues.

This is because insurance consumers lack the ability to respond, and even if they do, it requires significant time and cost, causing social inefficiency. There is a need for an independent dispute resolution body that can effectively address consumer complaints while ensuring transparency.

According to the National Assembly and the insurance industry on the 10th, Park Jae-ho, a member of the Democratic Party of Korea, recently proposed the "Automobile Liability Insurance Guarantee Act Amendment" aimed at establishing an Automobile Insurance Dispute Mediation Committee. The purpose of the bill is to fairly and promptly resolve disputes related to insurance payments from automobile accidents and eliminate unnecessary social costs.

According to Representative Park, when a traffic accident occurs, due to information asymmetry between insurance companies and policyholders, many policyholders or victims have no choice but to accept the insurance payments offered by the insurance companies.

In cases where they want to appeal, they must file a lawsuit to seek relief, and policyholders without economic or time resources often give up exercising their rights.

Park's office explained, "Currently, the Financial Supervisory Service's Dispute Mediation Committee handles all insurance disputes, but to eliminate unnecessary social costs, we propose establishing an Automobile Insurance Dispute Mediation Committee under the Ministry of Land, Infrastructure and Transport."

Proposal to Prevent Abuse of Medical Consultation System... Suggestion to Establish Independent Medical Review Organization

There are also calls to establish an independent review organization related to insurance companies' medical consultations.

This is because there have been continuous criticisms that insurance companies abuse the medical consultation system to unjustly deny or reduce insurance payments. Some argue that the selection of external medical consultation institutions is centered around insurance companies, leading to unfairness.

In fact, KB Insurance and NongHyup Property & Casualty Insurance recently received demands from the Financial Supervisory Service to improve the system, citing that "third-party medical consultations are extremely limited and requests are concentrated on a few doctors."

The Korea Insurance Research Institute argued that establishing an integrated independent medical review organization for the insurance industry could address fairness issues and reduce costs related to medical consultation procedures. Similar to the U.S. case where the federal or state governments establish Independent Review Organizations (IROs) to appoint medical consultants, creating an independent body could resolve disputes.

In the U.S., independent medical review organizations aggregate information and apply precedents from similar cases to new consultation requests, thereby reducing the number of consultations. The Korea Insurance Research Institute claimed that this approach could reduce overall costs in the insurance industry and shorten processing times.

However, the insurance industry remains cautious. They argue that decisions should consider the social costs of establishing independent organizations and worry that procedures might become more complicated.

An insurance industry official said, "Can we guarantee objectivity just because a committee is established under the Ministry of Land, Infrastructure and Transport?" and added, "If multiple committees are created, the resolution process will only become more complicated and may further increase consumer distrust in insurance."

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