Insurance fraud spikes, gov’t hastens to reform

With an increase in the number of insurance fraud cases, the government has announced plans to reform private health insurance policies to reduce such problems.

The recent spike in insurance fraud has so far resulted in the rise of insurance premiums for overall insurance holders, officials from the Financial Services Commission (FSC) and the Ministry of Health and Welfare announced during the first of their joint task force meetings on Wednesday.

The meetings are being held to facilitate the planning of detailed reform by October and to ensure their implementation by next year. The reform mainly aims at making the diagnosis processes more transparent, requiring all medical doctors to use state-recognized standardized treatment categories and requiring insurers to update their terms and conditions next year.

The overhaul initiative comes after fraudulent insurance customers who worked together with hospitals made headlines by altering medical treatment records in order to obtain larger insurance payouts and pocket the remainder. In fact, overall private health insurance premiums rose about 20 percent at the beginning of the year.

National health insurance covers many minor medical treatments in Korea, but many opt for a separate health insurance provided by private insurers in order to prepare for pricey and long-term medical treatments like surgeries or cancer treatments. More than half of Koreans, about 32 million people, are signed up with private health insurance plans as of the end of 2015, according to the FSC. Of these, only 20 percent have records of receiving insurance payouts for medical treatments, while the remaining 25 million have never used insurance throughout their subscription period.

With mounting insurance fraud cases, fire and marine insurance companies in Korea spent nearly 130 percent of what they collected from monthly premiums in actual insurance payouts as of last year, according to the Korea Insurance Research Institute. Ten fire and marine insurance companies raised the monthly premiums for health insurance products by 23 percent at the beginning of this year.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]