The Financial Supervisory Service said on the 21st it will implement administrative guidance that includes insurers' obligation to inform consumers of changes to claim review standards and measures to strengthen internal controls.
Until now, even when insurers changed their claim review standards to reflect Supreme Court rulings, they were not obligated to inform consumers in advance. As a result, many consumers received hospital treatment trusting existing claim payment practices, only to learn after their claims were denied that the insurer had changed its review standards.
Under this administrative guidance, when insurers change claim review standards based on Supreme Court rulings, decisions by the Financial Supervisory Service (FSS) dispute mediation committee, or authoritative interpretations or administrative guidance from financial or health authorities, they must inform consumers in advance. However, changes to review standards that favor consumers or strengthen reviews to prevent insurance fraud—where the risk of consumer harm is low—are excluded from the notice requirement.
Insurers must provide individual notice to insureds on all policies to which significant review standard changes apply through at least two channels, such as Alimtalk and app push notifications, and must also disclose related information on their websites. The notice and disclosure must include the basis and intent of the change, the details of the change, the effective date, and contact information for inquiries.
Insurers must also apply the changed review standards only after at least three business days have passed from the date they inform consumers. Accordingly, if an insured event occurs before consumer notice, the existing review standards apply regardless of when a claim is filed. In contrast, if an insured event occurs after at least three business days have passed since consumer notice, the changed review standards apply. If an insured event occurs before three business days have passed after consumer notice, the changed review standards cannot be applied.
The Financial Supervisory Service (FSS) also decided to strengthen insurers' internal controls. First, when changing claim review standards, insurers must establish standardized deliberation procedures to reflect the consumer perspective and enhance accountability. Executives in charge of claim review, consumer protection, and legal affairs must participate in the deliberation, and a senior executive or higher must give final approval. The compliance officer's check-and-balance function must also be incorporated.
In addition, before submitting an item for deliberation, prior review by the consumer protection, legal, and claim review departments is required. Insurers must apply these standardized change procedures to all changes in review standards that disadvantage consumers, such as switching from claim payment to nonpayment.
In particular, if the item under deliberation constitutes a significant change in review standards, the resolution must specify that it is subject to consumer notice. Currently, authority and procedures for changing review standards differ by insurer, with some allowing the review department to decide alone or to operate through consultations with consumer-related departments. Going forward, after prior review by the consumer protection, legal, and review departments, a committee deliberation must be held with participation by the executives in charge of consumer protection and legal affairs. Afterward, executive approval and the compliance officer's concurrence must be obtained, followed by website disclosure and individual consumer notices.
Through this, consumers will be able to confirm changes to review standards before receiving medical services, rather than learning of them for the first time when filing claims after using medical services. The obligation to inform consumers under this administrative guidance takes effect on the 22nd.
The scope of application is all insurance products where changes to claim review standards could potentially cause consumer harm. However, annuities, retirement insurance, surety insurance, and reinsurance—where the risk of consumer harm from changes to review standards is low—are excluded from the scope of application.