Even a Slight Touch Causes "Ugh" Collapse in 'Nailong' Patients... Korea Faces More Severe Moral Hazard Than the UK and Japan

Insurance Research Institute: "Urgent Need to Improve Insurance Payment Standards"

[Asia Economy Reporter Oh Hyung-gil] It has been argued that the frequency of bodily injury claims in South Korea's automobile insurance is relatively higher compared to the UK and Japan, indicating more severe moral hazard. There is a call to reduce uncertainty in medical expenses by establishing non-reimbursable fees for Korean traditional medicine and to improve the standards and system for insurance payouts.

On the 18th, Jeon Yong-sik, Senior Research Fellow at the Korea Insurance Research Institute, stated in the report "Comparison of Bodily Injury Compensation in Automobile Insurance among Major Countries" that "the issue of overtreatment of minor injuries in South Korea is more serious than in the UK or Japan."

According to the report, from 2015 to 2019, the accident occurrence rate for bodily injury compensation in South Korea averaged 5.46%, nearly five times higher than Japan's 1.34% and the UK's 1.0% (for minor injuries) during the same period.

Consequently, South Korea's bodily injury claim rate increased from 35.9% in 2015 to 41.5% in 2019, surpassing Japan's 38.7% in 2019. It also exceeded the UK's 40.9% bodily injury claim rate in 2011, when the issue of overtreatment of minor injuries was severe.

Senior Research Fellow Jeon diagnosed, "South Korean automobile insurance policyholders filed bodily injury claims 1.21 times and 1.16 times more frequently annually than policyholders in the UK and Japan, respectively," adding, "Although the insurance payout per bodily injury claim is smaller compared to the UK and Japan, it is rapidly increasing."

Furthermore, the annual growth rate of insurance payouts per bodily injury claim is 4.6% in South Korea, compared to 2.9% in the UK and 0.9% in Japan, which is about twice the medical cost inflation rate.

Senior Research Fellow Jeon emphasized, "There is an urgent need to build social consensus and improve the system to reduce social costs caused by moral hazard," and added, "If the automobile insurance system operation methods of major countries such as the UK and Japan are reviewed and improved, social costs can be reduced."

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