The Financial Services Commission prepared product design standards for the launch of fifth-generation indemnity health insurance in the first half of this year. It plans to raise the coinsurance rate for non-severe, non-covered services to prevent excessive use of medical services.
The Financial Services Commission on the 15th gave advance notice of revisions to the Enforcement Decree of the Insurance Business Act and the Insurance Business Supervision Regulations reflecting these details. The revisions include product design standards for the launch of fifth-generation indemnity health insurance in the first half of this year.
The annual compensation limit for non-covered medical expenses for severe cases is set at 50 million won, and the out-of-pocket maximum for using tertiary general hospitals and general hospitals is set at 5 million won. The annual compensation limit for non-covered medical expenses for non-severe cases is set at 10 million won.
Detailed standards such as exclusions will be reflected through revisions to the Detailed Enforcement Rules for Insurance Business Supervision. For non-severe, non-covered inpatient costs, the coinsurance rate is raised from the current 30% to 50%, and the scope of coverage is reduced.
Covered outpatient medical expenses will be applied in linkage with the National Health Insurance coinsurance rate. For covered inpatient medical expenses, the same 20% coinsurance rate as the current fourth-generation indemnity health insurance will apply.
The revisions also include measures to strengthen accountability for insurance sales channels. They mandate the establishment of internal control systems for general agencies (GA), prepare a branch management system at headquarters, and set detailed procedures for internal control.
The revisions also introduce the basic capital solvency ratio (K-ICS) as a financial soundness standard that insurers must observe. They ease K-ICS regulatory standards, such as the conditions for early redemption of insurers' subordinated bonds, and prepare a dual system improvement plan that introduces basic capital as a mandatory regulatory standard.
The scope for simplifying explanations when concluding insurance contracts through telemarketing channels will also be expanded. In addition, when operating a comparison guidance system to prevent improper replacements, the criteria for similar contracts will be specified, and related laws will be revised to establish order in insurance solicitation.
The advance notice for the Enforcement Decree and Supervision Regulations revisions and the notice of regulatory changes will run from Jan. 15 to Feb. 25. After reviews by the Regulatory Reform Commitee and the Ministry of Government Legislation and resolutions by the Vice Ministers' meeting and the Cabinet meeting, the revisions are expected to be completed in the first half of this year.