[Becoming an Insurance Insider] Mandatory Medical Certificates for Minor Car Accident Injuries... Will It Reduce Over-Treatment?

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[Asia Economy Reporter Oh Hyung-gil] It has been pointed out that, just as presenting a medical certificate is required for minor traffic accident patients to receive long-term treatment, South Korea's automobile insurance also needs institutional improvements to suppress excessive medical treatment, similar to the UK.

According to the report "Before and After Improvements in Automobile Insurance Systems in the UK and South Korea" released on the 23rd by Jeon Yong-sik, Senior Research Fellow at the Korea Insurance Research Institute, since the UK's system improvement in 2012, the number of personal injury compensation claims has decreased, the automobile insurance premium price index growth rate has slowed, and the scope of premium reductions is expected to expand.

The UK has been promoting system improvements since 2010 to suppress excessive personal injury compensation claims by minor injury patients.

The report explained, "To reduce costs related to personal injury compensation claims, in 2010, the UK Ministry of Justice established an online claims portal where perpetrators and victims can settle personal injury accidents," adding, "It also banned conditional fees, marketing, and incentive payments that induce personal injury lawsuits aiming for high compensation, and introduced improvements to the fee system for claims management companies by abolishing the commission fees these companies receive from victim representatives, lawyers, and vehicle repair shops during property and personal injury compensation processes."

Accordingly, after the 2012 improvement of the claims management company fee system, the growth rates of personal injury claims and whiplash claims have decreased, resulting in the automobile insurance premium price index growth rate falling from an average of 9.7% before 2012 to 3.0% after the system improvement.

On the other hand, South Korea has continued to see automobile insurance premium increases due to excessive medical treatment despite institutional improvements so far.

Since the introduction of inpatient management strengthening regulations in 2007, inpatient rates, medical expense growth rates, and automobile insurance premium increase rates showed a downward trend, but since 2013, medical expense growth rates and automobile insurance premium increase rates have turned upward.

Although the unified medical expense review and claim system introduced in 2013 was expected to show system improvement effects, adjustments for non-reimbursable treatments such as premium hospital rooms have been sluggish, resulting in minimal system improvement effects.

Senior Research Fellow Jeon said, "Since 2013, while inpatient rates have decreased, the growth rates of medical expenses and personal injury compensation losses have expanded, with the automobile insurance premium price index growth rate increasing to 4.2% in 2019 and 4.6% in 2020," adding, "Adjustments for non-reimbursable treatments such as Korean traditional medicine (premium hospital rooms, herbal medicine, etc.) have been sluggish, sustaining incentives for excessive medical treatment of minor injury patients."

The per capita medical expense for minor injury patients receiving Korean traditional medicine was 920,000 KRW in 2019, increasing at an average annual rate of 7.5% compared to 640,000 KRW in 2014.

The report added that continuous comprehensive institutional improvements are necessary, including improving compensation systems that correspond to damages, establishing settlement procedures, and suppressing medical behavior and incentives for excessive treatment of minor injury patients.

Meanwhile, the Financial Services Commission has announced plans to prepare measures to curb medical expenses for minor injury patients and intends to finalize improvements to the compensation system for minor injury patients. Mandatory medical certificates required for long-term treatment need to be revised through a Ministry of Land, Infrastructure and Transport notification, and reflecting fault in excess medical expenses for Personal Injury I can be implemented through standard policy terms revisions, so it is expected to be implemented as early as the second half of the year.

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