Delays in Korean Medicine Rule May Increase Auto Insurance Premiums

Recent data highlights ongoing concerns about overtreatment in Korean medicine hospitals related to auto insurance claims in South Korea. Although the proposed "8-week rule" aims to alleviate these concerns, its full implementation has been delayed. This postponement could subsequently lead to higher premium costs for policyholders as insurers grapple with claim expense management challenges.

Analysis of claims data from major insurance companies, including Samsung Fire & Marine Insurance and Hyundai Marine & Fire Insurance, reveals a significant trend. Over 90% of car accident patients who received long-term care visited Korean or joint Western-Korean medicine facilities, exceeding eight-week treatment periods for minor injuries, according to industry reports.

The disparity in treatment costs is further emphasized by financial data. Korean medicine and combined treatments resulted in notably higher expenditures than Western medicine alone, with Korean treatments reaching over 115 billion won, combined treatment costs exceeding 236 billion won, while Western medicine accounted for a mere 16.7 billion won.

The prevalence of long-term treatment cases at these facilities has sparked industry debate over potentially inflated insurance claims. Notably, one major hospital accounted for 13% of these long-term cases, raising concerns about consistency in treatment practices.

From a regulatory perspective, financial authorities plan to curtail treatment extensions beyond recognized recovery periods by requiring additional documentation for claims over eight weeks. However, opposition from the Korean medicine sector has delayed full rule implementation, extending the timeline further into the year.

This delay affects broader market dynamics, with auto insurance loss ratios surpassing the 80% operational break-even point, exerting financial pressures on premiums. As insurers respond to these cost pressures, policyholders may face increased premiums, reflecting the unrestrained claims environment.

Industry representatives caution that without regulatory intervention, the auto insurance segment may continue to face strain from claim excesses, potentially leading to more adjustments in consumer premiums.