'Losses Increase with Sales' Last Year's Real Loss Insurance Deficit Nears 3 Trillion Won... Cataract Cases Up 5 Times in 4 Years

Real Loss Ratio of 130% for Indemnity Insurance Despite COVID-19

Status of Actual Medical Insurance Loss Amounts and Risk Loss Ratios

[Asia Economy Reporter Oh Hyung-gil] Last year, the loss from indemnity health insurance approached 3 trillion won. Despite COVID-19, insurance payouts related to cataracts and physical therapy increased significantly.

According to the non-life insurance industry on the 16th, the total incurred loss amount for indemnity insurance by non-life insurers last year, i.e., insurance payouts and other expenditures, was tentatively estimated at 10.1017 trillion won.

Among the premiums received from policyholders, the risk premium available for insurance payouts after deducting operating expenses was only 7.7709 trillion won, resulting in an insurer loss of 2.3608 trillion won.

The ratio of incurred loss to risk premium was 130.5%, exceeding 130% for the second consecutive year following the 'worst' record of 134.6% in 2019. The total loss from indemnity insurance over three years since 2018 amounted to 6.1 trillion won.

Status of Insurance Payouts by Disease for Indemnity Medical Insurance

By disease category, insurance payouts for musculoskeletal diseases accounted for 2.9902 trillion won, or 41.2%. Insurance payouts from five non-life insurers increased by about 1 trillion won in three years. This was followed by cancer at 855.2 billion won and digestive/endocrine diseases at 652.6 billion won.

Insurance payouts surged sharply for certain diseases. Insurance payouts for cataracts alone skyrocketed to 410.1 billion won, about four times the 88.1 billion won paid in 2017. Payouts for skin diseases increased by 127% to 128.7 billion won.

As indemnity insurance losses grow, insurance premiums are rising. Samsung Fire & Marine Insurance raised premiums for pre-standardized indemnity insurance (sold until September 2009) and standardized indemnity insurance (sold until March 2017) by 19.6% and 13.6%, respectively. Samsung Life Insurance increased premiums by 18.5% and 12.0%, respectively. Elderly policyholders facing renewal every 3 to 5 years must pay premiums two to three times higher to maintain coverage.

Small insurers unable to bear losses have stopped selling indemnity insurance or raised the entry barriers. Mirae Asset Life Insurance ceased selling indemnity insurance from March. Life insurers currently not selling indemnity insurance include LINA Life, Orange Life, AIA Life, Fubon Hyundai Life, KDB Life, DGB Life, KB Life, and DB Life. Among non-life insurers, AXA (Aksa) General Insurance was the first to stop sales, followed by ACE Insurance and AIG Insurance.

An industry official said, "Since the COVID-19 outbreak, medical utilization has decreased, slowing the increase in incurred losses for indemnity insurance," but added, "If COVID-19 stabilizes and medical demand gradually recovers, loss ratios will worsen again."

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