Regulator eases no-claim health insurance premium discounts via phone
In short
South Korea’s Financial Supervisory Service said on October 5 it has simplified the health insurance no-accident contract conversion system, letting policyholders apply for a premium discount by phone or mobile message instead of visiting a branch. As of the end of May, only 1.16 million of 6.57 million contracts more than a year old were receiving the discount, or 17.6 percent. Insurers will check the policyholder’s accident record and convert the contract to the most favourable terms once the holder states the intention to switch.
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South Korea’s Financial Supervisory Service said on October 5 that it has overhauled the no-accident contract conversion system for health insurance, so that policyholders who go a set period without hospitalisation, surgery or a serious diagnosis can obtain a premium discount more easily. Under the change, an application can be made by phone or mobile message instead of in person, the FSS said. [ 2 , 3 ]
Until now, policyholders had to work out their own claim-free period and visit a branch or deal with an insurance planner within a fixed application window, which the FSS said made the process complicated. From now on, if the policyholder simply states the intention to convert, the insurer will check the accident record and change the contract to the most favourable terms, according to the FSS and Chosun Ilbo. Applications and screening can be handled without face-to-face contact, the documents say. [ 1 , 2 , 3 ]
The regulator’s figures show the gap the change is meant to close. As of the end of May, 6.57 million contracts had been in the system for more than a year, but only 1.16 million of them, or 17.6 percent, were receiving a discount. Kyunghyang Shinmun reported that 18 insurers operate the system, covering 10.81 million contracts in total, and that the FSS expects more policyholders were eligible than applied. [ 2 , 3 ]
Kyunghyang Shinmun reported one insurer’s rates: a man in his 40s with one claim-free year receives a 6.5 percent discount, rising to 45.9 percent after ten claim-free years. The discount applies from the date of the conversion application and is not retroactive, it reported. Hankook Ilbo reported that insurers plan to complete revisions to their computer systems and policy terms by January next year, and that guidance to policyholders will be given more often than the current once a year. [ 2 , 3 ]
“This is a direction of using an existing insurance contract to cut premiums,” an FSS official said, adding that policyholders should first check whether their contract is eligible for conversion and apply as soon as they receive a notice. Hankook Ilbo also noted criticism that the annual text message notice may be mistaken for spam. [ 2 ]
Why it matters
The change targets a discount that a large majority of eligible policyholders were not receiving, according to the regulator’s own figures, by removing the branch visit and planner meeting that the FSS said made applications cumbersome. For insurers, it means revising computer systems and policy terms, with preparation due by January next year. The documents give no estimate of the total savings involved beyond one insurer’s example.
Key facts
- The Financial Supervisory Service announced on October 5 that it had overhauled the health insurance no-accident contract conversion system. [ 2 , 3 ]
- Policyholders can now apply for the premium discount by phone or mobile message without visiting a branch. [ 1 , 2 , 3 ]
- The insurer will check the policyholder’s accident record and switch the contract to the most favourable terms once the holder states the intention to convert. [ 1 , 2 ]
- As of the end of May, 6.57 million contracts had been in the system for more than a year, and 1.16 million of them, or 17.6 percent, were receiving a discount. [ 2 , 3 ]
- Eighteen insurers operate the system, with 10.81 million contracts in total. [ 3 ]
- One insurer discounts 6.5 percent for a man in his 40s after one claim-free year and 45.9 percent after ten years, according to Kyunghyang Shinmun. [ 3 ]
- Insurers plan to finish revising their computer systems and policy terms by January next year. [ 2 ]
- The discount applies from the date of the conversion application and is not applied retroactively. [ 3 ]
Confirmed by several sources
- The Financial Supervisory Service announced the improvement to the no-accident contract conversion system on October 5. [ 2 , 3 ]
- Policyholders can apply for the discount by phone or mobile without visiting a branch or meeting an insurance planner. [ 1 , 2 , 3 ]
- The insurer checks the policyholder’s accident history and converts the contract to the most favourable terms available. [ 1 , 2 ]
- As of the end of May, 657万 contracts had been in the system for more than a year and 1.16 million, or 17.6 percent, were receiving a premium discount. [ 2 , 3 ]
Still unclear
- How much policyholders will save in total, or the range of discount rates across insurers. Only one outlet gives any figure, an example from a single insurer; the documents provide no industry-wide discount data.
- Whether discounts can be claimed for past claim-free years. Only Kyunghyang Shinmun states the discount is not retroactive and applies from the application date; the other documents do not address the point.
- The criticism, raised in one report, that insurers’ annual text message notices may be mistaken for spam. Mentioned by only one outlet, with no response from insurers or the regulator reported.
What local media are saying
Timeline, local time
- Chosun Ilbo reports that the Financial Supervisory Service has simplified no-accident health insurance discounts, with applications by phone or mobile. [ 1 ]
- Hankook Ilbo reports the overhaul and the FSS figures: 6.57 million contracts more than a year old, 1.16 million receiving discounts. [ 2 ]
- Kyunghyang Shinmun reports the change, the 18 insurers and 10.81 million contracts involved, and one insurer’s discount rates. [ 3 ]