Notice of Actual Loss Insurance Premium Increase to Be Sent This Week... Regulatory Intervention as a 'Variable'

"Serious Deficit in Real Loss Insurance, 20% Increase Needed"

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

According to the insurance industry on the 13th, major non-life insurance companies plan to send premium increase notices to customers eligible for indemnity insurance renewal starting this week. To renew the premium, customers must be notified in writing, by phone, or via electronic documents about 15 days before the insurance period ends.

Accordingly, the final increase rate is expected to be decided through consultations with financial authorities within this week. The insurance industry insists that premiums must increase by more than 20% amid a deficit of 3 trillion won in indemnity insurance this year.

The indemnity insurance deficit is expected to reach around 3 trillion won this year, and as of September, the loss ratio for indemnity insurance stands at 131%. Since the legal cap on premium increases is 25%, they argue that premiums must be raised by at least 20%.

On the other hand, financial authorities are reluctant to approve excessive premium hikes. Although indemnity insurance losses are severe, they maintain that consumer burdens should not be increased excessively. In recent years, the insurance industry has argued for significant premium increases, but none have been accepted.

Last year, non-life insurers proposed an average increase of 21%, with 20% or more for 1st and 2nd generation indemnity insurance and low teens for 3rd generation indemnity insurance, but during negotiations with authorities, the increase was limited to an average of 10-12%. It is expected that this year’s decision will likely be at a similar level to last year.

As indemnity insurance deficits continue, 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 resolve 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 added, "Since the medical community’s revenue is connected to this, indiscriminate excessive treatment inevitably occurs."

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