Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Insurers, oriental medicine in conflict
Association of Korean Medicine Vice Chairman Lee Jin-ho speaks during a press conference at GLAD Yeouido in Seoul, Wednesday. He refuted the insurance companies' claim that expenses for traditional medical services have caused rising loss ratios for car accident insurance. Yonhap
By Park Jae-hyuk
By Park Jae-hyuk
Non-life insurance companies have come into conflict again with traditional Korean medicine practitioners, since the Korea Insurance Development Institute (KIDI) mentioned expenses for traditional medical services as the main reason for the rising loss ratios of car accident insurance.
In its report published Monday, the institute said loss ratios for car insurance in 2019 rose 5.5 percentage points from a year earlier, due to increasing expenses for traditional medical services and repair costs.
Loss ratio refers to the ratio of losses ― paid insurance claims and adjustment expenses ― to premiums earned.
“Despite the partial increase of insurance premiums in the first half of last year, losses from personal damages rose 15.7 percent in 2019 from a year earlier,” KIDI's automobile insurance statistics team leader Jang Jae-il said. “The main reason for the losses was increased payments for traditional medical services, which showed a 28.2 percent rise year-on-year. Patients with only slight injuries tended to prefer traditional medical treatments.”
Expecting this will weigh on car insurers, he added continuous efforts are needed to get rid of causes for unnecessary premium hikes through the rationalization of insurance payments.
The Association of Korean Medicine (AKOM) refuted the argument at an emergency press conference, Wednesday.
“According to KIDI data, the total losses for car insurances in 2019 rose 1.15 trillion won ($955 million) to 14.7 trillion won, and 158.1 billion won was paid for traditional medical services,” AKOM Vice Chairman Lee Jin-ho said. “Expenses for traditional medical services only accounted for 13.6 percent of the 1.15 trillion won increase, so it is ridiculous to say traditional medical services are to blame for rising loss ratios.”
He also said slightly injured patients' preference for traditional medical services is because Korean medicine is more effective in treating lingering pains.
“Expenses for traditional medical services cannot be the reason for increasing loss ratios for car insurance,” he said. “It is more reasonable to attribute the increase to various factors, such as higher insurance coverage and the registration of more cars.”
Insurers denied the claim, saying unreasonable traditional medical services have also resulted in higher settlement money.
According to the General Insurance Association of Korea (GIAK), the average expense for traditional medical services is double that for ordinary medical services, because doctors of traditional Korean medicine tend to perform unnecessary treatments.
This was not the first time that insurers have conflicted with Korean medicine doctors.
GIAK Chairman Kim Yong-duk said in a press conference in January 2019 that “overtreatment” at some traditional Korean medicine hospitals had raised car insurance payments, weighing on car insurance policyholders.
“It seems that the oversupply of Korean medicine hospitals is another problem,” he said at that time. “Some patients were hospitalized for 180 days or 360 days.”
Back then, the AKOM issued a statement rebutting Kim's claim.
“Instead of traditional medical services, the GIAK should focus more on unnecessary payments for repairing imported vehicles that cost several million won to fix a small scratch,” the AKOM said at that time.