Average Increase of 9-16% in Real Loss Insurance Next Year... 3rd Generation Also Faces Increase

[Asia Economy Reporter Oh Hyung-gil] Next year's premium increase rate for indemnity health insurance has been summarized as an average of 9 to 16% depending on the subscription period.

According to the insurance industry on the 27th, the Financial Services Commission presented an 'opinion' to the industry to adjust the premium increase rate for indemnity insurance sold until March 2017 to 60% of the level requested by the industry.

Accordingly, insurance companies reportedly requested the Financial Services Commission that both the '1st generation' old indemnity insurance sold until September 2009 and the '2nd generation' standardized indemnity insurance supplied until March 2017 require an increase close to the upper limit of 25%.

However, the Financial Services Commission notified to suppress the increase rate at around 15%, considering that it is unreasonable to pass on chronic deficits caused by moral hazard of a small number of subscribers and some medical sectors to all subscribers, as well as the impact on soaring inflation.

Accordingly, the 1st and 2nd generation products will see premiums rise by an average of more than 9.9% for four consecutive years starting from 2019.

Early subscribers with a renewal cycle of five years will experience a combined reflection of the increase rates from 2017 to 2021, and when adding the age-related increase (an average of 3 percentage points per year), the perceived increase rate will exceed 50%. It is expected that 'bombshell' level bills will frequently appear, especially among elderly subscribers.

Regarding the '3rd generation' new indemnity insurance supplied after April 2017, the insurance industry’s proposal to terminate the 'stabilization discount rider' was accepted, resulting in an average premium increase of 8.9%.

The stabilization discount rider was a measure that increased 1st and 2nd generation premiums by about 10% in 2020 while discounting the 3rd generation premiums for one year. Although it was a temporary discount, it was applied for two consecutive years until this year.

The 3rd generation indemnity insurance has not seen any premium increases other than age-related increases since its launch less than five years ago, but with the termination of the stabilization discount, premiums will rise for the first time next year.

Along with the premium increase opinion, the Financial Services Commission also proposed a measure to offer a 50% premium discount for one year if subscribers of the 1st to 3rd generations switch to the 4th generation by June next year.

An insurance industry official said, "Insurance companies have agreed to the limited increase rate and conversion discount as a way to share the pain."

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