[Becoming an Insurance Insider] The Main Culprit of Insurance Complaints 'Self Damage Assessment'... Promoting the '50% Rule'

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[Asia Economy Reporter Oh Hyungil] The independent loss adjuster system, which allows insurance consumers to directly appoint loss adjusters, will be revitalized. The financial authorities are putting brakes on the insurance companies' 'self loss adjustment' practice by applying the '50% outsourcing ratio rule' and other measures to improve it.

The Financial Services Commission recently announced a legislative notice for the 'Amendment to the Enforcement Decree of the Insurance Business Act and Supervisory Regulations' to improve the loss adjuster system.

Loss adjustment is the first step for insurance payment, involving investigating the cause and responsibility relationship when an accident occurs to assess and calculate the appropriate insurance payment. Generally, insurance payments are made through insurance company document reviews, but when professional judgment on the loss amount is needed, the loss adjustment procedure is followed.

However, there have been criticisms that insurance companies have used loss adjustment subsidiaries to contribute to profits, utilizing insurance payment reductions as performance indicators.

As a result, controversies over underpayment of insurance claims have grown. While the number of loss adjustment cases among total insurance claims is about 3%, complaints related to loss adjustment account for 41.9% of all insurance complaints, which is high compared to the number of cases processed.

Accordingly, the Financial Services Commission plans to activate the 'independent loss adjuster system,' where consumers directly appoint loss adjusters, through amendments to the Enforcement Decree of the Insurance Business Act.

First, it was stipulated that consumers can directly appoint loss adjusters and that the costs incurred in this case are to be borne by the insurance company. It is mandatory to explain that the insurance company's consent is required when the consumer appoints directly and the criteria for the insurance company's consent.

In addition, to strengthen the fairness and responsibility of loss adjustment work, the Loss Adjusters Association is to establish standard work guidelines and recommend them to loss adjustment operators.

Large loss adjustment companies with more than 100 employees must meet work standards and requirements set by the financial authorities, and detailed standards and requirements will be prepared by the Loss Adjusters Association by drafting standard work guidelines.

Furthermore, the financial authorities plan to prohibit insurance companies from using insurance payment reductions as performance indicators when outsourcing loss adjustment work. Acts such as presenting fixed target ratios like the scale or rate of insurance payment reductions and loss ratios, and differentiating salaries, outsourcing fees, and outsourcing volumes based on achievement of targets will be restricted.

Insurance companies must objectively compare and evaluate subsidiaries and non-subsidiaries under the same standards, and when outsourcing more than 50% of the outsourcing ratio to subsidiaries, they must report the selection and evaluation results to the board of directors and disclose them publicly as required.

To enhance expertise, loss adjusters will be required to receive refresher training every two years, and systematic practical training and education programs will be established and operated.