Ultimately a Double-Digit Increase?…Authorities and Insurers Tug-of-War Over Actual Loss Insurance

[Asia Economy Reporter Oh Hyung-gil] Insurance premiums for indemnity medical insurance, which are up for renewal in January next year, are expected to rise by double digits or more.

The insurance industry insists that premiums must increase by more than 20% amid a deficit of 3 trillion won in indemnity insurance this year. On the other hand, financial authorities are reluctant to approve excessive premium hikes. They acknowledge the serious losses in indemnity insurance but believe consumer burdens should not be increased excessively.

According to the insurance industry on the 11th, major non-life insurers plan to send premium increase notices to customers eligible for indemnity insurance renewal as early as next week. To renew premiums, customers must be notified in writing, by phone, or electronically about 15 days before the insurance period ends.

Accordingly, the final increase rate is expected to be decided through consultations with financial authorities around mid-month. The insurance industry is demanding a minimum increase rate of 20% or more. The deficit in indemnity insurance is expected to reach 3 trillion won this year. As of September this year, the loss ratio for indemnity insurance is 131%. Since the legal cap on premium increases is 25%, they argue that premiums must be raised by at least 20%.

In recent years, the insurance industry has argued for significant increases in indemnity insurance premiums, but none have been accepted.

Last year, non-life insurers demanded an average increase of 21%, with 1st and 2nd generation indemnity insurance premiums rising by more than 20%, and 3rd generation indemnity insurance premiums increasing by the low teens. However, during negotiations with authorities, the increase was limited to an average of 10-12%. This year, it is expected that the decision will likely be at a similar level to last year.

As the indemnity insurance deficit continues, some insurers have stopped selling indemnity insurance. Currently, the number of insurers selling indemnity insurance has decreased from 30 in the past to 15.

To solve the structural problems of indemnity insurance, it is pointed out that management of non-reimbursable items must be strengthened. An insurance industry official said, "A small number of subscribers receive excessive medical treatment costing tens of millions of won per year, causing deficits," and criticized, "Since the medical community’s revenue is linked to this, indiscriminate excessive treatment inevitably occurs."

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