[Asia Economy Reporter Changhwan Lee] Among the insurance claims filed by customers to insurance companies, the companies with the highest ratio of unpaid insurance claims (insurance claim denial rate) were found to be AIG Sonhae Insurance and Hana Sonhae Insurance. For small and medium-sized non-life insurance companies, the proportion of non-face-to-face channels was higher compared to large insurers, resulting in a relatively higher insurance claim denial rate.
According to the Korea Non-Life Insurance Association on the 18th, as of the first half of this year, the average long-term insurance claim denial rate of 15 domestic non-life insurance companies was 1.62%. This improved by 0.04 percentage points from 1.66% in the first half of last year to the first half of this year.
Typically, insurance companies do not pay insurance claims if the claim does not meet the conditions specified in the policy or if the customer failed to properly disclose past medical history in advance. Among these cases, there are instances where not only the customer is at fault but also the insurer did not properly check before the insurance contract, so a higher denial rate also indicates a greater risk of disputes.
AIG Sonhae Insurance had the highest denial rate in the first half of the year at 3.24%, followed by Hana Sonhae Insurance at 3.14%. Next were AXA Sonhae Insurance at 1.71% and Heungkuk Fire & Marine Insurance at 1.69%.
For large non-life insurers, Samsung Fire & Marine Insurance was at 1.63%, Hyundai Marine & Fire Insurance at 1.65%, DB Insurance at 1.62%, and KB Insurance at 1.64%, all close to the average.
The higher insurance claim denial rates among small and medium-sized companies are understood to be due to their insurance sales methods focusing on non-face-to-face channels such as telemarketing (TM) and home shopping. In non-face-to-face channel sales, the rate of incomplete sales is relatively higher compared to face-to-face channel sales by insurance planners.
AIG Sonhae Insurance mainly sells insurance products through non-face-to-face channels such as TM channels, home shopping, and direct sales. AXA Sonhae Insurance had a high proportion of direct and TM channels, while Hana Sonhae Insurance had many sales through corporate agencies (GA).
Small and medium-sized companies also had higher incomplete sales rates. AIG Sonhae Insurance's incomplete sales rate in the first half was 0.12%, about four times higher than the industry average of 0.03%. Ace Insurance had 0.27%, more than nine times higher. Ace Insurance also has a high proportion of TM channel sales.
The insurance industry sees the need to reduce the insurance claim denial rate by lowering the incomplete sales rate. In particular, for non-face-to-face channels, there is a higher possibility of exaggerated sales compared to face-to-face channels, so efficient regulation is needed.
An industry official said, "Non-face-to-face channels have higher incomplete sales rates due to exaggerated explanations of insurance products or excessive sales competition during the sales process," adding, "Strengthening seller responsibility and improving the compensation system are necessary for better management."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
