Fixing 'Self Damage Assessment' That Always Cuts Insurance Payouts

Financial Services Commission Unveils Proposal for Improvement of Loss Adjustment System

[Asia Economy Reporter Jin-ho Kim] Financial authorities have decided to improve the overall loss assessment system, including measures to prevent the controversial practice of 'self loss assessment' that leads to insurance payout reductions.

On the 24th, the Financial Services Commission (FSC) announced a plan to improve the loss assessment system based on these points. Loss assessment refers to the first step in insurance payout, involving investigating the cause of the accident and responsibility, and calculating the appropriate insurance amount.

Currently, insurance companies create subsidiaries and outsource most loss assessment tasks to them, leading to ongoing criticism of 'self loss assessment' and debates over independence and objectivity. Complaints related to loss assessment account for 41.9% of all insurance complaints.

Accordingly, the FSC plans to improve the system to ensure fairness and objectivity from the initial stage of selecting loss assessors. First, detailed standards and procedures that insurance companies must follow when outsourcing loss assessment tasks will be established, and the use of performance indicators that induce insurance payout reductions will be prohibited.

Additionally, unfair practices such as forcing loss assessments favorable to insurance companies will be banned, and sanctions will be established for violations regarding outsourced loss assessors.

Furthermore, the FSC plans to promote the use of independent loss assessors directly appointed by consumers, whom consumers can trust more. When consumers file insurance claims, insurance companies will be required to provide detailed explanations about the selection of loss assessors, and consumers' right to choose loss assessors will be maximally guaranteed.

Moreover, to prevent medical consultations from being unfairly used to reduce insurance payouts, disclosure related to this will be expanded. While expanding information provision to consumers about loss assessment results, the expertise of loss assessors will also be strengthened to provide high-quality services.

An FSC official stated, "We will promptly proceed with related legal amendments in the second half of this year."

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