The introduction of the so-called '8-week rule' to manage long-term treatment for minor injury patients has been delayed, leading to increased losses in auto insurance. With seasonal factors expected to continue worsening the loss ratio in the second half of the year, forecasts indicate that an annual deficit is unavoidable.
According to the insurance industry on July 26, the operating loss for auto insurance among non-life insurers in the first half of this year was 189 billion won, a deterioration of over 200 billion won compared to the same period last year (30.2 billion won). This marks the first deficit in the first half of the year since 2020, when it recorded a loss of 126.2 billion won.
The loss ratio for auto insurance increased in the first half of the year, negatively impacting profitability. The cumulative loss ratio for the four major insurers—Samsung Fire & Marine, Hyundai Marine & Fire, DB Insurance, and KB Insurance—averaged 84.5%, up 1.9 percentage points from the same period last year.
Although auto insurance premiums were raised by over 1% at the beginning of the year, the effect on premium income has been limited due to reductions in premiums over the past four years. In contrast, costs associated with auto repair fees, parts, and wages for temporary workers have continued to rise, increasing the burden of the loss ratio.
Industry insiders cite the long-term treatment of minor injury patients and certain over-treatment practices as major factors exacerbating the loss ratio. As long-term treatment continues at traditional Korean medicine hospitals and clinics, the frequency of high-cost treatments and bundled billing has increased, leading to larger payouts.
In fact, the average cost of Korean medicine treatment per minor injury patient among the four major non-life insurers last year was 1.083 million won, nearly three times higher than the cost of Western medicine treatment (355,000 won). Of the 817.4 billion won spent on outpatient Korean medicine, the proportion of patients receiving six or more of eight specific treatments—such as acupuncture, moxibustion, cupping, herbal injections, and chiropractic care—was 64.4%.
As a result, the insurance industry is eager for the prompt implementation of the 8-week rule. This rule stipulates that when a minor injury patient requires treatment beyond eight weeks following a traffic accident, a specialized review committee will assess the appropriateness of the treatment.
An industry official stated, "In the second half of the year, the loss ratio is likely to worsen further due to seasonal factors and rising costs, so an annual deficit is expected. The longer the implementation of the 8-week rule and other regulatory improvements are delayed, the longer the recovery of auto insurance profits will take."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.