Actual Loss Insurance to Increase by 14%... Some Subscribers See an 80% Rise

3.5-Year Renewal Sees Bigger-Than-Expected Jump
Interest Also Grows in Potential Auto Insurance Rate Hikes

[Asia Economy Reporter Oh Hyung-gil] Mr. Choi Seong-tae (58, pseudonym) recently received a notice from his insurance company that his actual expense medical insurance premium would increase from the current 100,000 KRW per month to 180,000 KRW. This is nearly three times the increase of 30,000 KRW that occurred three years ago. Although those around him advised not to cancel the insurance because the coverage was good for policies purchased in the past, he is seriously considering maintaining it due to the burden of the premiums. Mr. Choi expressed dissatisfaction, saying, "There have been no claims for insurance benefits in the past two years, but the premiums keep rising," and "I don't understand why it keeps going up when I haven't actually received any benefits."

Subscribers are voicing complaints as the actual expense insurance premium rate hike for the new year has risen more than expected. Although the economic and psychological burdens have increased, they face a situation where switching to a new insurance policy would result in losses. Additionally, with automobile insurance premium adjustments scheduled soon, if premiums rise further, the perceived burden on households is expected to increase even more.

According to the insurance industry on the 7th, the average overall increase rate for 1st to 3rd generation actual expense medical insurance is about 14.2%. However, some subscribers who renewed contracts for 3 or 5 years at once have seen premiums rise more than expected, leading to a flood of complaints mainly on internet communities.

On one community, Ms. Jo Seong-ok (38, pseudonym), who identified herself as an office worker, said her actual expense insurance premium automatically renewed this month, increasing from 50,000 KRW to 90,000 KRW. Ms. Jo shared her concerns, saying, "The existing actual expense insurance has good coverage but expensive premiums, while the 4th generation actual expense insurance has cheaper premiums but many uncovered areas," and "Considering that I will likely visit hospitals more often in the future, switching insurance now might be a loss."

The rise in actual expense insurance premiums is primarily due to excessive medical use by some subscribers and indiscriminate application of non-reimbursable fees by medical institutions. Experts point out that despite knowing the problem, only premium adjustments are made without fundamental improvements to the system, passing the burden directly onto the majority of consumers.

Insurance agents also have no clear alternatives. One agent working in Yeongdeungpo-gu, Seoul, said, "Since the end of last year, the number of customers consulting about whether to maintain their actual expense insurance has surged," adding, "If the economic burden is low, I advise them to maintain it for now and consider switching at the next renewal."

Another agent lamented, "Some insurance companies actively encourage switching actual expense insurance, but from the perspective of dealing with customers, recommending switching first could lead to complaints later, so we have no choice but to respond passively."

With the bombshell increase in actual expense insurance premiums, there is also a possibility that automobile insurance premiums will rise soon, potentially increasing dissatisfaction among policyholders. Insurance companies maintain that although not immediately, automobile insurance premiums will need to be raised in the long term.

Since the COVID-19 pandemic, automobile insurance loss ratios have stabilized, but due to significant accumulated deficits over several years, premium increases are deemed inevitable.

Last month, automobile repair labor costs also rose by 4.5%. The financial authorities plan to discuss with the insurance industry in February, after last year's performance data is available, whether to raise automobile insurance premiums and by how much.

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