Digitization of Tied-Up Indemnity Claims... Delayed Due to Insurance Legislative Gaps

17 Insurance Business Act Bills Proposed This Year
16 Bills Pending Review

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] The passage of the bill to digitize claims for indemnity health insurance, aimed at improving the benefits for 38 million indemnity health insurance subscribers, has been postponed until next year. Although various amendments to the Insurance Business Act were proposed this year, only one bill passed through the National Assembly, marking a legislative hiatus in insurance-related laws.

According to the National Assembly's legislative information system on the 28th, a total of 17 amendments to the Insurance Business Act were proposed this year, of which 16 are still under review. Only the amendment easing the requirements for terminating insurance contracts via communication methods in response to the spread of COVID-19 was approved by the plenary session of the National Assembly.

Two bills related to the digitization of indemnity insurance claims, which attracted high interest from the insurance industry, government, and consumer groups, were proposed this year (by Assembly members Kim Byung-wook and Jung Chung-rae). Along with three bills proposed last year (by Assembly members Jeon Jae-soo, Yoon Chang-hyun, and Ko Yong-jin), a total of five bills have been submitted to the National Assembly.

The basic content of the bills centers on allowing indemnity insurance policyholders to request medical institutions to electronically transmit documents necessary for insurance claims, such as medical expense statements, to insurance companies or third-party institutions.

While this aims to resolve the inconvenience of issuing paper documents at hospitals and submitting claims via fax, email, or mail, the bills failed to pass due to opposition from the medical community, which argued that imposing obligations on medical institutions, which are not parties to the insurance contract, is unfair and raised concerns about misuse or abuse of medical information.

[Image source=Yonhap News]

The amendment proposed by the government to establish a basis for linking indemnity insurance policies with the National Health Insurance policy also failed to pass the National Assembly. This bill would have allowed the Financial Services Commission and the Ministry of Health and Welfare to consult and coordinate to jointly promote indemnity insurance and health insurance policies, and to conduct joint investigations into the operation status of indemnity insurance and health insurance.

The National Assembly's Political Affairs Committee has suggested considering directly stipulating the establishment of a public-private medical insurance linkage review committee and provisions for investigations within the law.

Legislation related to consumer protection was also delayed. A bill regulating so-called ‘self-loss adjustment,’ where large insurers outsource claims adjustment work to their subsidiaries, is still pending. Furthermore, an amendment proposing a general prohibition on self-loss adjustment was also introduced.

An amendment to allow electronic financial service providers to register as financial institution insurance agencies was not legislated. If amended as proposed, electronic financial service providers would be subject to bancassurance regulations related to sales, raising concerns about whether the same bancassurance regulations should apply equally to electronic financial service provider insurance agencies.

Currently, the Financial Supervisory Service handles insurance complaints and dispute mediation, but delays due to staffing limitations have caused inconvenience. In response, an amendment was proposed to allow the Insurance Association to perform tasks related to complaint handling and autonomous dispute mediation. However, concerns were raised about fairness if complaints are handled under the association's leadership, and there are differing opinions on the scope of complaints and disputes that can be managed by the private sector.

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