Chairman Kim Yong-duk of the General Insurance Association of Korea (GIAK) speaks at a New Year’s meeting with reporters in Seoul on Jan. 20.

The General Insurance Association of Korea (GIAK) is seeking to pursue institutional reform in indemnity insurance and car insurance as the loss rate is reaching a critical threshold.

GIAK is devoted to having the loss rate return to normal. The association has also revealed a plan to create a new insurance market tailored to meet social changes, while trying to reform insurance services utilizing new technologies.

The most negative factors of the sagging Korean general insurance industry are the worsening of the loss rate in the indemnity and car insurance segments.

GIAK is seeking to put the loss rate of indemnity insurance on a right track, which is reaching a critical threshold, by overhauling indemnity insurance products and non-payment item category.

First, GIAK is seeking to introduce a system in which an extra charge is imposed, or discounts are made on indemnity insurance premiums according to the uses of hospitals.

Currently, all insured persons of the same age are charged with same insurance premiums regardless of uses of hospitals, but the current regime is an insufficient structure to rein in excess medical care by some insurance persons, which causes losses to a majority.

In this regard, GIAK is considering introducing a system in which an extra charge is imposed, or discounts are made, on indemnity insurance premiums according to the uses of hospitals by commission experts’ consulting service on the issue.

The association is also planning to consult financial authorities on the introduction of the new regime. The association is seeking to convert indemnity insurance policy contracts to new ones.

The new insurance policy contracts will be cheaper, with a special agreement separating hand treatments, non-payment MRI scans, and non-payment injections.

The basic type will come 35 percent cheaper than conventional indemnity insurance policy products, and 10 percent cheaper with the inclusion of the special agreement.

GIAK plans to overhaul procedures, such as the easing of conditions for not screening, and conversion applications via internet and mobile channels, so that conventional indemnity insurance policy holders can convert to new insurance policies.

GIAK is seeking to increase a surcharge on the insured persons who cause incidents under the influence of alcohol as part of efforts to improve the loss rate of car insurance.

Under the current regime, if drunken drivers shoulder a maximum of 4 million won, they will be exempted from civil liability.

Compensation amounts, surpassing a surcharge a drunk driver is required to shoulder, tend to be transferred to the good insured persons, who do not cause accidents.

The association is negotiating with financial authorities on the issue of raising the deductibles of insured and convicted drunken drivers who cause accidents.

GIAK emphasizes a dramatic surge in the deductibles. GIAK plans to reinforce guidance on the use of alternative parts of cars delivered by automakers.

The association plans to publicize the use of alternative parts to customers via MMS messages in case of accepting accident reports to raise the public perception of the issue.

A study has been commissioned to lay an institutional foundation on the use of alternative parts of cars delivered by automakers.

The association plans to submit recommendations, including ones on detailed scrutiny guidelines on insufficient Oriental medical treatment regulations and the improvement of timing of disclosing medical costs to prevent overcharging of medical fees by some hospitals.