After suffering minor injuries such as bruises and sprains in a traffic accident, it becomes difficult to receive treatment at a hospital for a long time.
In order to prevent so-called’naylon patients’ who claim excessive insurance money than the extent of their injuries, the financial authorities are promoting a plan to have their own insurance cover the treatment costs of minor injuries (injury grades 12-14) according to the negligence rate. Currently, the entire treatment cost can be received from the other insurance company regardless of the negligence rate.
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The Financial Services Commission announced on the 1st the’policy direction for trust and innovation in the insurance industry’ containing these details. Kwon Dae-young, head of the Financial Industry Bureau of the Financial Services Commission, said, “We will promote system improvement to reduce over-treatment and suppress the increase in auto insurance premiums for the entire public by letting the person handle the negligence part with his own insurance.”
Auto insurance can receive the full treatment cost from the other insurance company regardless of the negligence rate as long as the negligence rate is not 100% when an accident occurs. For example, suppose that the cost of treatment for the perpetrator A with a 90% negligence rate is 6 million won, and the treatment cost for the victim B with a 10% negligence rate is 500,000 won. In this case, the insurance company of B, which has a low percentage of negligence, compensates A with 6 million won, but the insurer of the perpetrator A compensates B with only 500,000 won.
The Financial Services Commission believes that such a system encourages over-treatment. In particular, the settlement money is often calculated based on the treatment cost expected in the future, so even if the negligence rate is high, the expectation that the settlement money can be received more if the treatment cost is charged a lot is working, so that over-treatment will be initiated.
Increased auto insurance treatment costs. It increased 48% from 2,1703 billion won in 2015 to 3,2136 billion won last year. The increase in the treatment cost for minor patients is one of the reasons.
Accordingly, the Financial Services Commission decided to review a plan to treat the negligence portion of the treatment expenses for minor injuries as insurance (collateral for personal accidents). An official from the Financial Services Commission said, “If you are injured and charged excessively for treatment, your insurance premium will be increased in the future, which may cause disadvantages, so unnecessary treatment will be significantly reduced.” In compensation for property such as automobile repair costs, repair costs are already borne according to the negligence rate.
There is also a plan to make it mandatory to submit a medical certificate when a minor patient is treated beyond the normal treatment period. Currently, it is possible to receive treatment at a hospital for a long time with only subjective pain without objective evidence such as a medical certificate. In the case of the UK, it is mandatory to issue a medical certificate for all neck, back, and shoulder sprains.
Policy direction for trust and innovation in the insurance industry of the Financial Services Commission.
The reason for the financial authorities to strengthen control of minor indemnity patients in traffic accidents is to prevent premium increases as much as possible.
Insurance per person for minor injuries was 1.79 million won last year, a 42% increase from 2016 (1.26 million won). The treatment cost for minor patients, which accounts for the majority of traffic accidents, has increased, and the auto insurance treatment cost has increased from 2.17 trillion won in 2015 to 3.223.6 billion won last year. Financial authorities estimate that out of 3 trillion won in treatment expenses, 540 billion won is overdue treatment. This excess treatment will result in an additional burden of 23,000 won per insured person.
In addition, the financial authorities plan to enable insurance companies to create a comprehensive life finance platform that allows insurance companies to not only subscribe to insurance, but also manage health, wealth, and diet at the same time. To this end, regulations are relaxed, including increasing the number of tasks that insurance companies can do, and support for the use of non-financial data such as health and disease.
The current one-company-one-license deregulation is also reviewed. Currently, each financial group permits one life insurance company and one non-life insurance company. The aim is to alleviate this so that various insurance companies within a single financial group, such as disease and pension insurance-specialized insurance companies and simple insurance-specialized life insurers, like Japan, can operate specialized businesses for each customer and product.
Reporter Ahn Hyo-seong [email protected]
