Abuse of Medical Consultation as an Excuse for Non-Payment of Insurance? Insurers Claim Only 0.03% (Comprehensive)

Medical Advisory System Controversy
Rep. Kim Byung-wook Points Out at National Audit
Insurance Industry "Highlighting Some Cases"

[Asia Economy Reporter Oh Hyung-gil] The medical advisory system introduced by insurance companies to fairly pay insurance claims has become embroiled in controversy over its inadequacy. Criticism has arisen that insurance companies collude with doctors and exploit the system to deny claims to policyholders who lack medical knowledge.

Insurance companies recently claim that the rate of non-payment after medical advisory reviews is improving, and that only a very small number of non-payment cases are being highlighted unfairly.

According to the insurance industry on the 6th, the total number of medical advisory cases conducted by life insurance companies in the first half of this year was 9,878.

This is a decrease of 919 cases (8.5%) compared to the previous quarter. The proportion of medical advisory cases out of the total 5,778,687 insurance claims was only 0.17%.

The number of cases where insurance claims were denied after medical advisory was 1,968, and partial payments were made in 3,821 cases. Compared to the total number of insurance claims, these represent only 0.03% and 0.06%, respectively.

For non-life insurance companies, as of the first half of the year, medical advisory was conducted on 21,614 cases (0.08%) out of a total of 24,945,560 claims, which is an 18.6% decrease from 26,580 cases in the second half of the previous year. Among the claims that underwent medical advisory, only 682 cases were denied payment.

Currently, when a policyholder files an insurance claim, the insurance company can conduct a medical advisory after accident investigation to seek medical judgment.

However, recent criticism has been raised that insurance companies are abusing the medical advisory system. Assemblyman Kim Byung-wook of the Democratic Party pointed out at a National Assembly audit last month that the non-payment rate through the medical advisory system has reached up to 79% in the past three years.

Assemblyman Kim also advocated for improvements to the medical advisory system of life and non-life insurers, including ▲ revising and strengthening the requirements of the medical advisory system ▲ strengthening the obligation to explain the consent procedure for medical advisory ▲ establishing a credible medical appraisal system ▲ and disclosing information about advisors and advisory institutions.

A consumer organization claimed that insurance companies conduct over 30,000 medical advisory cases annually, of which 38% result in denial or reduction of insurance payments. Recently, even independent loss assessment firms have appeared, claiming that insurance companies’ medical advisory can be abused and using this for their own business purposes.

Yoon Seok-heon, Governor of the Financial Supervisory Service, is delivering opening remarks at the first meeting with the heads of six financial associations held at the Financial Supervisory Service in Yeouido, Seoul, on the 4th. Attending the meeting were Kim Tae-young, Chairman of the Korea Federation of Banks; Shin Yong-gil, Chairman of the Life Insurance Association; Kim Yong-duk, Chairman of the General Insurance Association; Kwon Yong-won, Chairman of the Korea Financial Investment Association; Kim Deok-su, Chairman of the Credit Finance Association; and Lee Soon-woo, Chairman of the Korea Federation of Savings Banks. Photo by Yoon Dong-ju doso7@

Agreements with Specialist Medical Societies Enhance Fairness of Medical Advisory

On the other hand, the insurance industry argues that some cases are being exaggerated or statistics distorted, misrepresenting the unavoidable and lawful procedures.

An insurance industry official said, "The low proportion of medical advisory cases among total insurance claims means that medical advisory is conducted selectively. Since medical advice is sought in cases suspected of overdiagnosis or insurance fraud, the non-payment rate is inevitably high," he rebutted.

Measures to enhance the fairness of medical advisory system institutionally are also expanding. Since last year, the Life Insurance Association has signed business agreements with the Korean Academy of Manual Medicine (March) and the Korean Orthopedic Association (October), introducing procedures to receive medical advisory from fairly selected specialists.

The Financial Supervisory Service also plans to implement measures to mandate guidance on appeal and other relief procedures so that consumers can dispute the results of medical advisory conducted by insurance companies.

This is a follow-up to last year’s revision of supervisory regulations requiring insurance companies to notify consumers of advisory results when denying or reducing insurance payments based on medical advisory.

The Financial Supervisory Service stated, "By mandating explanations of the third-party medical institution referral procedure, failure to comply can now be sanctioned as a violation of the duty to explain."

A Life Insurance Association official said, "Since it is not easy to detect fraudulent cases where medical institutions collude without verification, the medical advisory system is inevitable from the perspective of consumer protection. We will strive to build a rich pool of advisors through specialist medical societies to enhance fairness."

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