Yoon Seok-yeol Government, Will the Deficit in Real Loss Insurance Improve... Growing Expectations

[Asia Economy Reporter Changhwan Lee] As the Yoon Seok-yeol administration is about to launch, there is growing anticipation for improvements in the deficit of indemnity medical insurance (실손의료보험, Silson Insurance), a long-standing issue for insurance companies.

According to Shinhan Financial Investment on the 19th, President-elect Yoon Seok-yeol's insurance-related pledges include expanding pension support, strengthening nursing and caregiving support, expanding catastrophic medical expense support, introducing a fast-track listing system for high-cost anticancer drugs and new drugs for severe and rare diseases, improving the Safe Speed 5030 policy, and strengthening the license disqualification period for drunk drivers.

The basic framework of President-elect Yoon's approach to the insurance industry focuses on strengthening the function of public insurance, specifically the National Health Insurance. If the function of National Health Insurance is enhanced, claims on private insurance such as Silson Insurance will decrease, leading to an improvement in deficits.

The pledges related to National Health Insurance include strengthening nursing and caregiving support and introducing a fast-track listing system for high-cost anticancer drugs and new drugs for severe and rare diseases.

Among these, the introduction of the fast-track listing system for high-cost anticancer drugs and new drugs for severe and rare diseases is analyzed in the report as potentially leading to an improvement in loss ratios, assuming insurance premiums remain unchanged.

This is due to the reduction in high-cost drug payments within accident insurance claims. Although the proportion of drug costs within total insurance payouts is unknown, it is estimated that the non-reimbursed portion of drug costs, which had recently been on the rise, was a burden factor on the loss ratio.

The report also noted that, above all, since the new government is likely to pursue pro-business policies, there is heightened expectation that insurance companies may raise Silson Insurance premiums higher than before.

Although the deficit scale of Silson Insurance for domestic insurers reaches trillions of won annually, insurance companies have been unable to significantly increase premiums due to concerns over government policy directions and increased consumer burdens. However, the new government is expected to reduce the burden related to Silson Insurance premium hikes compared to the previous administration.

Heeyeon Lim, Senior Researcher at Shinhan Financial Investment, predicted, "Considering the new government's administration, the precedent of Silson Insurance rate liberalization during the Park Geun-hye administration, and the trend of rising Silson Insurance rate increases since 2019, even if policies to strengthen National Health Insurance coverage continue, the pace of Silson Insurance premium increases will accelerate further."

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