Insurance Premium Bombshell... Massive Switching of Real Loss Insurance

[Asia Economy Reporter Kiho Sung] It has been revealed that former subscribers of indemnity health insurance (실손보험) massively switched their insurance policies in the first half of this year.

According to the insurance industry on the 31st, new subscriptions for indemnity health insurance in the third quarter (July to September) at five non-life insurance companies?Samsung Fire & Marine Insurance, KB Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and Meritz Fire & Marine Insurance?amounted to 182,367 cases (excluding group, high-risk, and elderly indemnity insurance). Compared to 1,012,323 new subscriptions in the first half of this year, this represents a sharp 64% decrease on a monthly average basis.

Including policy switches by existing indemnity insurance contract holders, the total subscriptions in the third quarter were 220,218 cases, also showing a 71% decline.

The sharp drop in monthly average indemnity insurance subscriptions in the third quarter is attributed to the launch of the '4th generation' indemnity insurance product in July, which restructured the product so that premiums increase based on medical usage and the insured’s out-of-pocket expenses also rise.

Ahead of the indemnity insurance reform, the number of subscribers increased more rapidly in the first half of this year compared to last year. The insurance industry analyzed that this was due to consumers rushing to subscribe amid news of reduced benefits in indemnity insurance and insurers conducting 'sell-out marketing'.

In particular, policy switches from '1st generation indemnity insurance (before September 2009)' and '2nd generation standardized indemnity insurance (October 2009 to March 2017)' to '3rd generation indemnity insurance (April 2017 to June 2021)' in the first half of this year reached approximately 505,000 cases, doubling last year’s total of 250,000 switches.

Generally, old indemnity insurance policies are known for their 'unlimited' medical expense benefits, leading subscribers to strongly prefer maintaining them; however, in the first half of this year, many old product subscribers chose to switch contracts.

The non-life insurance industry analyzed that this was because the heavy financial burden on subscribers increased due to large-scale losses in indemnity insurance.

In recent years, premiums for 1st and 2nd generation indemnity insurance have been raised by double-digit percentages, resulting in many subscribers facing renewal premium notices this year that were two to three times higher.

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