Insurance companies in South Korea must now route any revision to claim review criteria through a mandatory internal approval chain and notify policyholders before the changes take effect, under administrative guidance issued by the Financial Supervisory Service (FSS) that took effect June 22, 2026, as reported by The Asia Business Daily. The rules, part of the FSS’s Financial Consumer Protection Improvement Roadmap, establish for the first time a standardized structure for how criteria changes are made and communicated across the industry.
The governance requirements represent a significant operational shift for Korean insurers. Under the new framework, any change to claim review criteria that could be unfavourable to policyholders must follow a defined sequence: consumer protection, legal, and claims departments must conduct prior review before an item reaches deliberation; a committee that includes executives overseeing consumer protection and legal affairs must then convene; the relevant executive must grant formal approval; and a compliance officer must sign off before the change can be disclosed or applied.
An FSS representative said: “After the implementation of this administrative guidance, consumers will be able to make more informed medical and insurance decisions, which is expected to reduce insurance claim disputes. The objectivity and transparency of insurers’ claim reviews will improve, and the practice of certain brokers or medical institutions recommending expensive procedures will be prevented – ultimately reducing consumers’ unnecessary medical expenses.” Previously, each insurer operated under its own internal procedures, with no standardized requirements governing which departments needed to be involved or which executives held decision-making authority. The new rules remove that discretion for criteria changes that are unfavourable to policyholders.
Once the internal approval process is complete, insurers face a mandatory waiting period before revised criteria can be enforced. Policyholders must be notified through at least two channels – such as messaging applications and mobile push notifications – and changes must be disclosed simultaneously on the insurer’s official website. Each notification must specify the grounds and intent behind the revision, the substance of what is changing, the implementation date, and contact details for further inquiries. Revised criteria cannot be applied until at least three business days have elapsed from the time consumers are notified. The disclosure obligation is triggered by significant changes to review criteria arising from Supreme Court rulings, decisions by the FSS Dispute Mediation Committee – the FSS’s internal dispute resolution body – or directives from financial or health authorities.
The FSS guidance targets a specific and recurring problem: policyholders proceeding with medical treatment under the assumption that coverage applied, only to receive a denial after criteria had shifted. Under the prior regime, insurers had no legal obligation to inform consumers when review standards changed, regardless of the source of that change. Consumers discovered the new criteria only when a claim was filed and rejected.
By requiring public disclosure before revised criteria take effect, the FSS said the guidance will allow policyholders to factor current standards into their medical and insurance decisions. The regulator also identified a secondary effect: making criteria changes visible in advance is expected to reduce situations in which brokers or medical providers direct patients toward high-cost procedures based on outdated knowledge of what insurers will cover. The FSS guidance does not specify penalties for non-compliance.
The guidance follows years of documented payout disputes that consumer agency data have recorded across the industry. According to Seoul Economic Daily, the Korea Consumer Agency reported on June 7 that 85.8% of the 930 insurance-related damage relief filings it received in 2025 – 798 cases in total – involved insurers declining to pay benefits. These are the dispute scenarios the FSS guidance is designed to interrupt: consumers denied payment after treatment, often because review criteria had changed without their knowledge. Annual filings at the agency have trended upward, from 756 in 2021 to a peak of 1,067 in 2023, before easing to 978 in 2024 and 930 in 2025.
Among the 798 denial cases, the most common cause was an insurer’s refusal to recognize a treating physician’s diagnosis or recommended treatment, accounting for 538 cases, or 67.4%. Of those, 377 cases – or 70.1% – involved consumers either refusing an insurer’s request for an independent medical consultation or rejecting its outcome. The average benefit amount at stake in these consultation-related denials was 16.18 million won.
The Korea Consumer Agency also identified a gap in existing industry-level controls. Internal control standards for medical consultations have been in place since August 2021, established jointly by the General Insurance Association and the Life Insurance Association, which represent the non-life and life insurance sectors respectively. The agency said those standards fall short because they impose no meaningful restrictions on which cases can be referred for a medical consultation in the first place, and it plans to request both associations to revise them accordingly. The FSS guidance and the consumer agency’s findings together define the compliance environment Korean insurers now face. Where internal governance around criteria changes was once left to each company’s discretion, it is now subject to a prescribed approval structure, binding disclosure timelines, and an industry self-regulatory framework that regulators have signalled requires further revision.
