This month, financial authorities stepped in to rein in non-life insurance companies as they over-competed by raising insurance diagnostic rates for similar high-incidence cancers (thyroid cancer, other skin cancers, borderline cancers and in situ). ) for tens of millions of won. Typically, the diagnostic rate for similar cancers is about 20% of the diagnostic rate for general cancer, which covers stomach cancer, lung cancer and colon cancer.
However, some non-life insurance companies have attracted controversy by using the “trick” of dividing the fee for cancer diagnosis by region, increasing the insurance premium for the “back” area with low incidence to 100 million won and linking the insurance premium for similar tumors to 20 million won.
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According to the insurance industry, on the 26th, the day before, the Financial Supervision Service expressed concern about excessive competition related to similar rates for cancer diagnosis to some non-life insurance companies, including Samsung Fire & Marine Insurance, Meritz Fire & Marine Insurance, Lotte Insurance and NH Nonghyup Insurance. Earlier this month, it was pointed out that these indemnity insurance companies are overheating themselves by continually inflating diagnostic rates for similar cancers.
An official from the non-life insurance industry said: “After the Financial Supervisory Service blocked them, these insurance companies decided to lower diagnostic rates for similar cancers again starting from the 27th.”
Insurance companies sell cancer insurance by dividing it into general cancer and similar cancer. Because similar tumors have a survival rate close to 100% and a good treatment prognosis compared to general tumors, the coverage amount has been limited to 20% of general tumors to avoid excessive insurance payments.
For example, if the coverage amount for general cancer is 10 million won, similar cancers are only covered up to 2 million won, which is 20% of the coverage. In 2022, after non-life insurance companies pulled the reins by selling quasi-cancer coverage amounts inflated to 40-50 million won and received a warning letter from the Financial Supervision Service, this implicit “rule” is article was more firmly respected: [보푸라기]Insurance premiums for similar cancers are gradually decreasing, “Why?” (6 August 2022)
However, this month, several casualty insurance companies began raising rates for similar cancer diagnoses. A new guarantee called “Integrated Cancer Treatment Charges” was created, and the general cancer guarantee, which included various cancers such as stomach, lung, liver, brain, and head and neck cancer, was dismantled . By dividing the fee for cancer diagnosis into 10-12 specific areas, the fee for diagnosis of head and neck cancer, which has a low incidence and loss rate, was set at 100 million won, and the fee advance payment for similar cancers linked to this was set at 20 million won. This is a trick that takes advantage of the fact that the cancer diagnosis fee for each area does not have to be the same amount.
At the same time, to lower insurance premiums, the coverage limits have been significantly lowered to 5 million won for stomach cancer and 2 million won for lung cancer, which are bundled as comprehensive cancer treatment expenses . This is because insurance premiums usually tend to be proportional to the diagnosis rate and loss ratio.
A reverse phenomenon has occurred where the guaranteed amount is lower for stomach and lung cancers, which require greater treatment costs or income security than small-scale cancers. Some non-life insurance companies belatedly promoted this comprehensive cancer insurance as a “copycat product” and even set conditions for the elimination of the minimum insurance premium, causing excessive competition. If you do not apply the basic minimum insurance premium standard for taking out insurance, such as 10,000 to 30,000 won, you may charge lower premiums than other casualty insurance companies.
The problem is the possibility of future conflicts. Since the incidence of similar cancers is high, if the risk rate (loss rate) of the product increases in the future, insurance companies may take measures such as strengthening insurance payment screening. It is emphasized that if this were to happen, many disputes could arise between insurance companies and consumers and this could lead to an overall increase in insurance premiums. Some point out that if insurance payouts increase, loss ratios could worsen, which could undermine the financial health of insurance companies.
An insurance industry official said: “There are cases where some insurance companies cause disputes by selling unreasonable coverage products and thus making it difficult to review the insurance payment,” and added: “If a large number of such products are sold, future risks as as litigation and finances will increase like a boomerang for the respective insurance company.” “I can come back,” he said.
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