Illustration = Lee Eun-hyeon

South Korea’s Simplified Loss Insurance Claims System Faces Challenges

The ‘Simplified Loss Insurance Claims’ system, scheduled to be implemented as a pilot service in October, is facing difficulties due to low hospital participation. Only 4.3% of the target medical institutions have established a computer system, and medical record management companies are also reluctant to participate in the system.

According to financial authorities, out of 4,235 medical institutions (excluding public health centers) subject to the simplified claim system for actual loss insurance, only 197 have established a computer system. 47 general hospitals have completed the establishment of the system, but participation from small hospitals with fewer beds is slow.

Local hospitals are particularly hesitant to participate, as they will not face any sanctions for not providing the service. As a result, patients who receive treatment at small hospitals will have to obtain the necessary documents themselves and apply for insurance benefits from insurance companies as they do now.

Electronic Medical Record (EMR) companies, responsible for converting medical records into databases, are also hesitant to participate in the service. To implement the simplified actual loss claims system, EMR companies must develop related systems and install them in hospitals. However, only about 10 EMR companies out of 55 have expressed their intention to participate.

The insurance industry and EMR companies are struggling to agree on the cost of system development. EMR companies are demanding separate maintenance and repair costs and a fixed fee per claim, in addition to the system development and installation costs. The insurance industry argues that paying a fee per claim is excessive, considering the large number of annual actual loss insurance claims.

Financial authorities are working to encourage the medical community’s participation, but progress is slow. The insurance industry is concerned that the lack of cooperation from the medical community will not only delay the pilot service in October but also the planned expansion to neighborhood hospitals and pharmacies in October next year.

Reporter Song Ki-young (rckye@chosunbiz.com)