South Korean lawmakers are discussing measures on how to simplify insurance claims processes after the Korea Insurance Research Institute found policyholders were abandoning their claims due to overly complicated procedures.
According to a Korea Times report, the Korea Insurance Research Institute surveyed 2,440 Koreans aged 20 and above, and found that 14.8% of respondents said they did not submit an insurance claim after undergoing medical treatment in 2018 because they felt the claims procedure was too complicated, compared to the fees they paid out-of-pocket.
Last year, the market’s non-life insurers paid out a total of KRW7.5 trillion (US$6.5 billion) in insurance claims, with over KRW1 trillion (US$860 million) failing to reach the policyholders, the survey said.
Rep. Koh Yong-jin of the ruling Democratic Party of Korea filed a bill that sought to amend several laws to help simplify the insurance claims procedure. The bill will require hospitals to supply all the necessary documents for the policyholder's claim to the insurance company.
“The bill should be ratified immediately. Actual insurance policyholders have a right to get their claims without such a complicated procedure,” said Koh in a joint statement with a consumer rights group.
In the current system, policyholders must obtain the necessary documents from the hospital before submitting them to the insurance company. The bill will require hospitals to send the documents directly to the insurance company, upon the policyholder’s request.
While financial authorities and insurers reacted positively to the proposal, the Korea Hospital Association opposed it, saying it could lead to the leakage of personal data.
“The practice could impose an administrative burden on hospitals,” the association said in a press statement. “Plus, there are not many hospitals across the country featuring such automated teller systems for insurance claims.”