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FSS investigating risk calculation in medical insurance premiums
The Financial Supervisory Service is set to conduct a investigation into the non-life insurance sector amid allegations that some companies improperly calculated risk for medical insurance premiums.
Several insurers have recently raised fees by more than 50 percent, arguing that risk factors increased, according to regulatory officials.
The regulator’s probe will target eight insurance firms selling medical insurance products. They are Samsung Fire & Marine, Dongbu Fire, Hyundai Marine & Fire, LIG, Meritz Fire & Marine, Hanwha General, Lotte and Heungkuk Fire & Marine.
The companies sold over 600,000 products at relatively cheap prices between August and September 2009, the two months before the FSS required from October that policyholders cover 10 percent of medical fees excluding the amount covered by national health insurance. Insurers advertised at the time that it would be customers’ last chance to subscribe to a 100 percent-covered product.
Some insurers including Hanwha, Lotte and Heungkuk, however, are considered to have miscalculated risk factors and practically “dumped” the products, according to the financial watchdog, which led to skyrocketing insurance fees now that the products have came up for renewal as the three-year period ended.
The FSS and the Financial Services Commission are pushing to revise supervisory regulations, according to reports on Sunday.
According to the amendment, the upper limit for yearly hikes in insurance fees may drop from the current 25 percent to around 10 percent. The renewal cycle may also be cut from its current three to five years to one year. The move would prevent sharp increases in insurance fees at the moment of renewal and secure the policyholder’s right of choice, according to financial authorities.
Insurance may also cover less, as the financial authorities are considering having the insured pay for 20 percent of the medical fees instead of the current 10 percent. This would be to prevent excessive medical treatment, the authorities said.
It has not yet been decided if the amendment will increase the proportion of self-coverage in all medical treatments or only the expensive and less-used categories like MRIs.
Regulators also plan to have insurance companies sell medical insurance products separately, rather than as a tie-in sale with other products like general or long-term property insurance.
The amendment will be confirmed as early as this month after a public hearing which will take place next week.
By Park Min-young (claire@heraldcorp.com)
The Financial Supervisory Service is set to conduct a investigation into the non-life insurance sector amid allegations that some companies improperly calculated risk for medical insurance premiums.
Several insurers have recently raised fees by more than 50 percent, arguing that risk factors increased, according to regulatory officials.
The regulator’s probe will target eight insurance firms selling medical insurance products. They are Samsung Fire & Marine, Dongbu Fire, Hyundai Marine & Fire, LIG, Meritz Fire & Marine, Hanwha General, Lotte and Heungkuk Fire & Marine.
The companies sold over 600,000 products at relatively cheap prices between August and September 2009, the two months before the FSS required from October that policyholders cover 10 percent of medical fees excluding the amount covered by national health insurance. Insurers advertised at the time that it would be customers’ last chance to subscribe to a 100 percent-covered product.
Some insurers including Hanwha, Lotte and Heungkuk, however, are considered to have miscalculated risk factors and practically “dumped” the products, according to the financial watchdog, which led to skyrocketing insurance fees now that the products have came up for renewal as the three-year period ended.
The FSS and the Financial Services Commission are pushing to revise supervisory regulations, according to reports on Sunday.
According to the amendment, the upper limit for yearly hikes in insurance fees may drop from the current 25 percent to around 10 percent. The renewal cycle may also be cut from its current three to five years to one year. The move would prevent sharp increases in insurance fees at the moment of renewal and secure the policyholder’s right of choice, according to financial authorities.
Insurance may also cover less, as the financial authorities are considering having the insured pay for 20 percent of the medical fees instead of the current 10 percent. This would be to prevent excessive medical treatment, the authorities said.
It has not yet been decided if the amendment will increase the proportion of self-coverage in all medical treatments or only the expensive and less-used categories like MRIs.
Regulators also plan to have insurance companies sell medical insurance products separately, rather than as a tie-in sale with other products like general or long-term property insurance.
The amendment will be confirmed as early as this month after a public hearing which will take place next week.
By Park Min-young (claire@heraldcorp.com)
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Articles by Korea Herald
