South Korean Loss Insurance System Strained by Unverified Cancer Treatments
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The South Korean loss insurance market is facing escalating costs and rising premiums due to a surge in claims related to expensive, medically unverified cancer treatments, particularly immune enhancement injections. A growing proportion of payouts are covering “non-paid items” – treatments not covered by national health insurance – raising concerns about over-prescription and the financial sustainability of the system.
Loss Insurance Payments Surge 11.5%
Total loss insurance payouts from five major South Korean insurers – Samsung Fire, DB Insurance, Hyundai Maritime, KB Insurance, and Meritz Fire & Marine – reached 5.57 trillion won in the first half of the year. This represents an 11.5% increase compared to the 4.995 trillion won paid out during the same period last year, exceeding the annual growth rate of 8.5% observed between 2023 and 2024.
The Rise of “Non-Paid” Medical Expenses
The escalating costs aren’t solely attributable to increased medical treatment overall. A significant driver is the increasing proportion of claims for “non-paid items,” which now account for 57.3% of total insurance burdens as of the first half of this year. This trend has persisted, remaining at 57.5% in both 2023 and 2024. Loss insurance is increasingly functioning as a safety net for expenses outside the scope of public healthcare coverage, creating a system where hospitals have greater pricing freedom and patients rely on insurance to cover the costs.
Questionable Treatments and the NECA Evaluation
The core of the problem lies in the prescription of high-priced treatments with unproven efficacy. Specifically, immune enhancement injections marketed as “cancer treatment aids” are being widely utilized despite negative evaluations from the Korea Institute of Health Care (NECA). One case highlighted involved a patient, identified as K, with a history of breast cancer surgery, who received extensive immune enhancement injections during a hospitalization in Seoul, resulting in medical expenses totaling 825 million won. The hospital provided a statement framing the hospitalization as “cancer treatment” to support the insurance claim.
NECA has explicitly stated that the “safety and effectiveness of additional administration of cancer treatment” with drugs like Psy Mosin Alpha 1 (Jachadin) and Biscuum Alboom (Mornoba) is “insufficient,” and does not recommend their use in conventional chemotherapy. However, these drugs continue to be prescribed, often justified by claims of “reinforcement of immunity” and “cancer recurrence” prevention, and are subsequently covered by loss insurance.
The proliferation of these non-paid prescriptions is inevitably driving up insurance costs and the overall loss rate. Data submitted to the Financial Supervisory Service by National Assembly member Kim Jae-seop reveals a loss ratio of 119%, a 2.8 percentage point increase from the end of last year (116.2%). This means insurers are paying out 19% more in claims than they are receiving in premiums. The latest generation of loss insurance products are experiencing even higher loss ratios, exceeding 130% in the first half of 2024.
Calls for Reform and Stricter Regulation
Industry stakeholders are increasingly calling for structural changes to the loss insurance system. There is a growing consensus that coverage should not extend to treatments with unclear medical benefits, and that non-paid items deemed unsuitable by credible agencies like NECA should be excluded from coverage altogether or significantly limited.
“If only one hospital is made with a letter of excess, and the loss of loss is maintained, the burden will eventually go back to all good subscribers,” a senior official stated, emphasizing the need to protect policyholders from unnecessary costs.
To address the issue, revisions to standard terms and conditions are being proposed, alongside strengthened administrative oversight to ensure financial authorities can incorporate NECA’s re-evaluation results into the scope of insurance guarantees. The future of South Korea’s loss insurance system hinges on its ability to balance patient access to care with responsible financial management and evidence-based medical practices.
