Insurance Premiums for 1st and 2nd Generation Real Loss Subscribers Rise 16%... Half-Price Discount for 4th Generation Conversion (Comprehensive)

End of 3rd Generation Discount Benefits... Expect a 9% Increase
"Carefully Consider Switching Your Actual Expense Insurance"

[Asia Economy Reporter Oh Hyung-gil] Policyholders renewing their indemnity health insurance next year in the 1st and 2nd generations will see their premiums increase by an average of 16%. For 3rd generation policyholders, the premium discount of around 9% that had been applied since last year will disappear, leading to a noticeable premium hike.

On the 31st, the Life Insurance and Non-life Insurance Associations announced that this was finalized following consultations with financial authorities regarding indemnity health insurance premiums. The average overall premium increase rate for 1st to 3rd generation indemnity insurance is approximately 14.2%.

Indemnity insurance is categorized by sales period into 1st generation (sold until September 2009), 2nd generation (sold until March 2017), 3rd generation (sold until June 2021), and 4th generation (sold from July 2021 onwards).

However, since many products have renewal periods ranging from 3 to 5 years, it is expected that elderly policyholders will experience premium increases exceeding 50%. This is because the increase rate during the renewal period is applied all at once, combined with rate hikes due to aging.

An official from the Non-life Insurance Association explained, "This increase rate represents the average level across all insurers for consumer guidance and is not a uniform rate applied to all policyholders. The actual increase rate applied to individual policyholders may vary depending on the type of product subscribed to, age, gender, and the loss ratio situation of each insurer."

The insurance industry responded that even with this premium increase, it is far from sufficient to reduce the loss ratio. Initially, the industry had requested a 20% increase for 1st and 2nd generation products.

This is due to rapidly increasing losses. For non-life insurance, the loss ratio (risk loss ratio) recorded 131.0% by the end of the third quarter, and the loss amount is estimated to reach 3.5 trillion KRW by year-end.

Switching to 4th Generation Cuts Premiums in Half for One Year

Additionally, to actively encourage switching to the 4th generation indemnity insurance launched last July, the insurance industry decided to offer a 50% discount on premiums for one year if 1st to 3rd generation policyholders switch to the 4th generation within six months.

For example, a 40-year-old male’s monthly premium would decrease from 10,929 KRW to about 5,460 KRW.

However, this applies only when switching to a product from the currently subscribed insurer, and the specific implementation schedule will be separately discussed and announced by the insurance industry later.

Experts advise that since there are differences not only in premiums but also in coverage between existing indemnity insurance and 4th generation products, individuals should carefully consider their medical usage and financial burden before switching.

An insurance industry official stated, "Since resolving issues such as excessive medical treatment and non-reimbursed services is a crucial measure to eliminate deficits in indemnity health insurance, we plan to continuously work on improvement plans and propose them to government authorities so that indemnity insurance can establish itself as a 'second national health insurance.'"

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