Average 1.5% Increase in Indemnity Insurance... 9.5 Million Subscribers, 3rd Generation Up 18%

1st Generation Expected to Decrease by 4%, 2nd Generation to Increase by 1%
Car Insurance Premium Reduction Rate and Range to Be Decided Soon

Next year, the premiums for indemnity health insurance will increase by an average of 1.5%. However, the perceived impact will vary depending on the generation of the indemnity insurance subscribed to. For the 3rd generation, with over 9.5 million subscribers, premiums will rise by as much as 18%, while for the 1st generation, with about 8 million subscribers, premiums are expected to decrease by around 4%.

On the 18th, the Korea Life Insurance Association and the General Insurance Association announced that the 2024 indemnity health insurance premium increase rate was calculated at an average (weighted average based on premiums) of 1.5%. This is a significant reduction compared to the increases of 14.2% and 8.9% in 2022 and last year, respectively.

However, the perceived effect will differ by generation. Indemnity insurance, often called the second National Health Insurance with about 39 million total subscribers, is divided into four generations based on the subscription period. The detailed coverage methods and scope also differ. The 1st generation refers to those who subscribed before September 2009, the 2nd generation from October 2009 to March 2017, the 3rd generation from April 2017 to June 2021, and the 4th generation after July 2021.

Premiums for the 1st generation indemnity insurance, with about 8.2 million subscribers, are expected to decrease by an average of around 4% next year. The 2nd generation, with the largest number of subscribers at 19 million, is calculated to have an increase rate of about 1%. The 4th generation is not subject to premium adjustment as it has not been on the market for five years yet.

The premium increase rate for the 3rd generation insurance, the second largest with about 9.55 million subscribers, is estimated at 18%. Following a 14% increase during the first hike last year, premiums are expected to show a double-digit increase again this year. This is explained by the steep rise in the loss ratio (the ratio of paid insurance claims to received premiums), making premium hikes inevitable.

According to the Korea Insurance Research Institute, as of the third quarter of this year, the loss ratio for indemnity insurance was highest for the 3rd generation at 154.9%. It has sharply increased since recording 103.6% in 2020, rising to 116.2% in 2021 and 131.5% in 2022. In contrast, the loss ratios for the 1st and 2nd generations began to stabilize after peaking at 143.7% and 135.2% respectively in 2019, due to a reduction in excessive cataract treatments. By the third quarter of this year, they had decreased to 120.5% and 109.6%, respectively.

The two associations clarified that this premium increase rate is an average level and will not be uniformly applied to all subscribers. It may vary depending on the product renewal cycle, type, age, gender, and insurance company. A representative from the associations explained, "The level of premium increase for the indemnity insurance you have subscribed to can be known at the time your individual insurance contract is actually renewed," adding, "It can be confirmed through the premium renewal notice sent by the insurance company via written documents, email, or KakaoTalk notification." (The timing of premium renewal* varies by subscriber)

Going forward, the two associations and the industry plan to quickly seek feasible improvement measures regarding excessive indemnity coverage for some problematic non-reimbursable items such as manual therapy and nutritional injections, which have been pointed out as one of the causes of the recent essential medical service gaps, and propose them to the authorities.

Meanwhile, the general insurance industry has decided to actively pursue reductions in automobile insurance premiums soon. This is intended to share the difficulties faced by the public due to high interest rates and inflation and to fulfill social responsibility. Details such as whether to reduce premiums, the extent of reduction, and the timing of implementation will be autonomously reviewed and decided by each insurance company considering their management situation.

Previously, the general insurance industry lowered automobile insurance premiums by about 1.2?1.4% (7 companies) in April last year and again by about 2.0?2.1% (8 companies) in February this year.