On Nov. 29, the General Insurance Association of Korea (GIAK) visited Anna’s House, a homeless protection facility in Seongnam, Gyeonggi Province, to deliver sponsorship items such as winter supplies and foodstuffs.
Since 2018, the GIAK has been continuously delivering donations, including foodstuffs worth about 140 million won, to Anna’s House by partnering with Joint New Hope Healing Fund jointly with companies in the financial industry. This time, the amount of the donation reached 15 million won.
“It is quite meaningful that we had an opportunity to reach out to underprivileged people suffering from the prolonged COVID-19 incident,” said Jung Ji-won, chairman of the GIAK. “We will step up our efforts to take care and support more people in need of help in our society down the road.”
In the meantime, Jung Ji-won, chairman of the General Insurance Association of Korea (GIAK) said “We will support the reinforcement of the management of non-payment medical expenses paid through medical indemnity insurance and improve the system to prevent the unnecessary leakage of auto insurance money,” in his New Year’s address for 2021 in early this year.
“We will support the activation of insurance buyers’ conversion of contracts to settle fourth-generation medical indemnity insurance launched in the second quarter of this year,” he said.
This year, the non-life insurance industry and financial authorities launched and tried to settle fourth-generation medical indemnity insurance to prevent leakage of insurance money and normalize the loss ratio.
However, after the launch of fourth-generation medical indemnity insurance, the response was not so great. This is because insurers were not active in selling medical indemnity insurance due to its high loss ratio, and consumers were attracted to it.
The number of subscriptions and conversions to fourth-generation medical indemnity insurance is under a third of the 1,517,384 new subscriptions and conversions in the first half of this year.
From July to September, the number of fourth-generation medical indemnity insurance sales by the five major non-life insurance companies was only 182,367 policies, and the number of existing first- to third-generation subscribers stood at 222,218.
The five non-life insurers referred to Samsung Fire & Marine Insurance, KB Insurance, Hyundai Marine Insurance, DB Insurance and Meritz Fire & Marine Insurance.
Fourth-generation medical indemnity insurance is a product in which insurance premiums are adjusted according to the degree of non-payment treatments, such as manual ones.
If there is a large amount of non-payment treatment use, insurance premiums will be increased by up to 300 percent. From the perspective of insurance consumers, they can have growing concerns that the burden of insurance premiums will expand.
The loss ratio of medical indemnity insurance has continued to grow. Losses from medical indemnity insurance in 2020 amounted to 2,359.6 billion won, up 0.6 percent from 2,354.6 billion won in 2019.
By the first half of this year, losses were also tallied at 1,412.8 billion won, up 17.9 percent from 1,198.1 billion won in the same period of last year.
The loss ratio reached 132.4 percent and the cumulative loss amount was 5,527.1 billion won, up 11 percent from the same period of 2020.
Insiders of the non-life industry imputed the increase in the loss rate despite an insurance premium hike at the beginning of the year, to a failure to manage non-payment medical expense due to excessive treatments at medical institutions and an increase in new non-payment medical expense items.
Industry insiders and financial authorities are discussing raising insurance premiums while expecting losses to reach 3 trillion won in 2021.
The rate of the raise is expected to be determined in a meeting of the Insurance Policy Council from late November to early December.
This year, special COVID-19 situations were reflected, putting the loss ratio of auto insurance on the right track.
The Korean Financial Supervisory Service changed regulations to make it obligatory to hand in medical certificates in giving compensations for slight wounds of insurance buyers and to use objective statistics after selecting cost elements such as high parts cost which has a big impact on insurance premiums in the case of compensations for physical damage.
Discussions are also ongoing with respect to oriental medical expenses which increased significantly last year.
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