The Life Insurance Association and the Non-life Insurance Association announced yesterday that they will increase the premiums of first and second generation indemnity insurance subscribers by an average of 16% this year. Insurance premiums for 35 million people, excluding the 4th generation indemnity insurance, launched in July last year, will also increase by an average of 14.2%. Literally, it’s an insurance premium bomb. According to the subscription period, from 1999 to October 2009, when the indemnity insurance was introduced, it is classified as a first-generation product. Products sold until March 2017 are the second generation. The third-generation product was sold until June 2021, and the fourth-generation indemnity insurance has been on sale since July last year. In the four years from 2017 to 2021, the indemnity insurance premium increased at an average annual rate of 13.4% with only a small increase.
During the same period, the amount of insurance paid to insurers increased by an average of 16% per year. As the industry has a structure in which insurance premiums of KRW 100 to KRW 130 are paid out, the deficit is expected to reach KRW 3.9 trillion in 2022. That’s not all. The Insurance Research Institute predicted that under the current structure, insurance premiums would have to be raised by 19.3% every year to reach the break-even point.
The problem is the ignorant subscribers addicted to ‘insurance shopping’ and the moral hazard of the vicious medical profession that targets loopholes in unpaid medical care. Last year, the top 10% of insurance payouts swept 60% of total insurance money. 750,000 people, or 2.2%, had insurance benefits over 10 million won, while 21 million people, 63.5%, did not claim insurance at all. If the subscribers’ ‘excessive medical bills’ are not paid off, the stability of indemnity insurance, which is called the ‘second health insurance’, will be shaken and the financial soundness of health insurance will inevitably deteriorate.
There is an urgent need to address the main culprit of the deterioration of the loss ratio, ‘unpaid wages’. The hospital arbitrarily determines the contents and cost of non-covered treatment that is not covered by the health insurance. As a result, most of the treatment items are focused on musculoskeletal and ophthalmic diseases. Indemnity insurance for cataract surgery alone exceeded 1 trillion won last year. It is a de facto ‘insurance fraud’ that unscrupulous subscribers and hospitals are wracking with. It is not a workaround to give a 50% discount on premiums for 1st to 3rd generation subscribers who temporarily switch to 4th generation products by June for one year. We need to find a structural solution to find out insurance money leaking in the name of suspicious high-cost non-reimbursement treatment. The insurance industry should also make efforts to ensure that there are no unnecessary increases, rather than relying on easy premium increases. Financial authorities, which are intervening in the decision of insurance premium increase rates, must also come up with radical measures in a hurry to avoid being stigmatized as a ‘bouncer’.
[ⓒ 세계일보 & Segye.com, 무단전재 및 재배포 금지]
.