South Korea's FSS eases health insurance no-claim premium discount process
Version 2: A fuller report from a second business outlet added practical detail: 18 insurers operate the system, one insurer discounts premiums by 6.5% after a year without an accident and 45.9% after ten years, and the discount applies only from the date of application and is not backdated.
In short
South Korea's Financial Supervisory Service said on October 5 that it has overhauled the health insurance “no-accident contract conversion” system, under which policyholders who have had no hospitalisation, surgery or severe disease diagnosis keep their coverage while paying a lower premium. Once a policyholder confirms the intention to convert, the insurer will check the accident record and apply the most favourable conditions itself, and applications can be made remotely, including by phone. Of the 6.57 million contracts signed at least a year before the end of May, only 17.6% (1.16 million) were receiving the discount; Kyunghyang Shinmun reported that 18 insurers run the system and that the discount applies from the application date and is not backdated.
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South Korea's Financial Supervisory Service said on October 5 that it had overhauled the “no-accident contract conversion” system for health insurance, under which policyholders who have had no hospitalisation, surgery or severe disease diagnosis keep their coverage while paying a discounted premium. The regulator said it had reorganised cumbersome and difficult procedures so that a single answer from the policyholder would be enough to receive the discount. [ 1 , 2 , 3 ]
Take-up of the existing discount has been limited. As of the end of May, 10.81 million contracts were enrolled in the no-accident conversion system, and of the 6.57 million contracts signed at least a year earlier, 1.16 million, or 17.6%, were receiving a premium discount. The regulator said many more policyholders were likely to be eligible but were not using the benefit. Kyunghyang Shinmun reported that 18 insurance companies operate the system. [ 1 , 3 ]
Previously, policyholders learned of the option through insurer notices and then had to contact an agent, apply for conversion and choose the conversion type themselves. Under the revised process, once the policyholder confirms the intention to convert, the insurer checks the accident record, confirms the notified details with the customer and applies the most favourable conditions. Policyholders can also apply remotely, without visiting a branch or asking an agent. [ 1 , 2 , 3 ]
The regulator said it would increase the number of notices, keep sending them after the contract anniversary date and periodically check whether an application or conversion has been made. Guidance will use several channels, including text message, telephone and post, and to prevent customers mistaking the notices for spam or advertising, the title and first sentence will state that the message concerns a premium discount and list both the pre- and post-conversion type and the premiums. The Financial Supervisory Service said it plans to complete work on computer systems and insurance policy terms by January next year. [ 1 ]
Kyunghyang Shinmun reported that one insurer discounts a man in his 40s by 6.5% for a year without an accident and by 45.9% after ten years. It said the discount applies from the date of the conversion application and is not applied retroactively, so policyholders should check and act on an insurer's notice promptly. [ 3 ]
Why it matters
The change targets an existing discount that many eligible policyholders have not used, so it can lower costs on health policies already on the books rather than creating a new product. It shifts the work of finding the best terms from the customer to the insurer, which must now check the claims record itself. The effect depends on insurers completing the planned computer-system and policy-term changes by January next year, and on policyholders applying, since the discount is not applied retroactively.
Key facts
- The Financial Supervisory Service said on October 5 that it had overhauled the no-accident contract conversion system for health insurance. [ 1 , 2 , 3 ]
- Under the system, policyholders who have had no hospitalisation, surgery or severe disease diagnosis keep their coverage while paying a discounted premium. [ 1 , 2 , 3 ]
- Previously policyholders had to contact an agent, apply for conversion and choose the type themselves; now the insurer checks the accident record and applies the most favourable conditions once the policyholder confirms the intention. [ 1 , 2 , 3 ]
- As of the end of May, 10.81 million contracts were enrolled, and of the 6.57 million signed at least a year earlier, 17.6% (1.16 million) were receiving discounts. [ 1 , 3 ]
- Kyunghyang Shinmun reported that 18 insurers operate the system and that one insurer discounts a man in his 40s by 6.5% after one year without an accident and 45.9% after ten years. [ 3 ]
- Applications can now be made remotely, and notices will be sent by text message, telephone and post, with more frequent reminders including after the contract anniversary date. [ 1 , 3 ]
- The discount applies from the date of application and is not backdated, Kyunghyang Shinmun reported. [ 3 ]
- The Financial Supervisory Service plans to complete work on computer systems and insurance policy terms by January next year. [ 1 ]
Confirmed by several sources
- The Financial Supervisory Service announced improvements to the health insurance no-accident contract conversion system on October 5. [ 1 , 2 , 3 ]
- Policyholders who have had no hospitalisation, surgery or severe disease diagnosis keep their coverage while receiving a premium discount. [ 1 , 2 , 3 ]
- Under the revised process, the insurer, not the policyholder, selects the conversion type offering the most favourable conditions. [ 1 , 2 , 3 ]
- As of the end of May, 10.81 million contracts were enrolled in the system, and of the 6.57 million signed at least a year earlier, only 17.6% (1.16 million) were receiving a discount. [ 1 , 3 ]
- Policyholders will be able to apply for conversion remotely, and guidance will be sent by text message, telephone and post. [ 1 , 3 ]
Still unclear
- Which insurer offers the discount rates described in the Kyunghyang Shinmun report is not stated. Kyunghyang Shinmun describes a discount of 6.5% after one accident-free year and 45.9% after ten years for a man in his 40s but does not name the insurer, and no other document carries these figures.
- The exact date the revised process takes effect is not stated. Yonhap says only that computer systems and insurance policy terms are to be completed by January next year, and the other documents give no commencement date.
- Whether all 18 insurers will adopt the revised process, and how it will be enforced, is not described. Kyunghyang Shinmun reports the number of insurers operating the system but the documents do not say how the revised process applies to each company.
- The full range of conversion types and their discount rates is not given. The documents give only a single illustrative example of a discount rate, not the complete schedule.
- Chosun Ilbo's report is available only as a feed summary and carries none of the enrolment figures, insurer count or discount examples. The document for Chosun Ilbo has no article text, so its detail cannot be checked against the fuller reports.
What local media are saying
Timeline, local time
- Yonhap publishes the Financial Supervisory Service announcement on the revised no-accident contract conversion system. [ 1 ]
- Chosun Ilbo reports the planned changes, describing them as lowering the threshold for the no-accident discount. [ 2 ]
- Kyunghyang Shinmun reports the simplified, partly non-face-to-face process, including the number of insurers and example discount rates. [ 3 ]