The Ministry of Land, Infrastructure and Transport (MOLIT) and the Financial Supervisory Service are considering a plan to assign the reviewer that determines whether minor injury patients need additional treatment to an entity other than insurers in connection with the revised enforcement rule of the Automobile Damage Guarantee Act. In the enforcement rule that the Ministry of Land, Infrastructure and Transport has preannounced, insurers are the reviewing entity, but the Korean medicine community is opposing it, saying the review could lack fairness.
The revised enforcement rule of the Automobile Damage Guarantee Act, known as the "8-week rule," centers on having insurers decide whether to extend or halt insurance payments through their review when minor injury patients receive treatment for more than eight weeks. The government and the Financial Supervisory Service (FSS) say that if some customers receive excessive treatment and the auto insurance loss ratio rises, the premium burden on all policyholders increases.
According to the financial authorities on the 5th, the Ministry of Land, Infrastructure and Transport (MOLIT) and the Financial Supervisory Service (FSS) are in talks with the Association of Korean Medicine (AKOM), the Association of Korean Medicine Hospitals, and others regarding the revised enforcement rule of the Automobile Damage Guarantee Act. The goal is to decide who will review whether additional treatment is needed when the treatment period for traffic accident minor injury patients exceeds eight weeks.
The revised enforcement rule of the Automobile Damage Guarantee Act, which the Ministry of Land, Infrastructure and Transport (MOLIT) preannounced in June last year, includes a requirement that when the treatment period for minor injury patients who suffered traffic accidents rated injury grades 12 to 14 exceeds eight weeks, they must submit a medical certificate, progress records, and accident impact details. Insurers then review and decide whether to halt insurance payments. If a patient does not accept the review result, the dispute mediation committee deliberates within a week.
The Korean medicine community argues that fairness suffers if insurers that pay benefits also review whether to pay. Because insurers need to reduce loss ratios, they are more likely to conclude that additional treatment is unnecessary. In that case, demand for treatment falls and the Korean medicine community is hit.
As the Korean medicine community pushed back, the Ministry of Land, Infrastructure and Transport (MOLIT) and the Financial Supervisory Service (FSS) are considering having the Traffic Accident Compensation Supervisory Service (TACSS), an agency under the Ministry of Land, Infrastructure and Transport, take over the review work from insurers. The Traffic Accident Compensation Supervisory Service is an agency established to support the automobile damage compensation guarantee program.
The 8-week rule is a policy aimed at lowering the sharply rising loss ratio in auto insurance. In line with the authorities' shared-growth financial policy, non-life insurers have cut auto insurance premiums every year since 2022. As a result, major insurers are taking losses in auto insurance.
The insurance industry cites rising medical costs at Korean medicine hospitals as a cause of the increase in the auto insurance loss ratio. Lawmaker Lee Ju-young of the Reform Party noted at a National Assembly audit in Oct. last year that as auto insurance medical costs soar, Korean medicine hospitals account for about 60% of total medical costs. According to the Health Insurance Review & Assessment Service (HIRA), medical costs at Korean medicine hospitals, which were 430.8 billion won in 2019, exceeded 1 trillion won last year.