Democratic Party of Korea Lee Jae-myung and People Power Party Kim Moon-soo, the presidential candidates, unveiled a pledge to lower pet medical expenses targeting 15 million pet owners. Candidate Lee presented a standard fee system in which the government directly determines the medical fees, while Candidate Kim proposed a disclosure system that publishes medical fees on the internet. However, the insurance industry believes that to increase the pet insurance subscription rate, the urgent need is to mandate the public disclosure of medical records rather than adopting a fee or disclosure system.
According to the insurance industry and others on the 28th, Candidate Lee announced a pledge to apply a common price (fee) to all veterinary medical items. If the government sets standards such as 'the medical fee for patellar luxation is 1 million won,' animal hospitals must charge within that range.
The argument that the introduction of a fee system must precede the revitalization of pet insurance has been consistently raised. Currently, even for the same disease, one hospital charges 1 million won, while another hospital charges 3 million won, leading to a wide disparity in medical fees. Insurance companies claim that if medical expenses are not standardized within a certain range, there is a significant risk of unnecessary expensive treatments due to excessive care, making it difficult to predict loss rates and challenging product development.
However, there are analyses suggesting that the introduction of a fee system and the rise in pet insurance subscription rates are separate issues. This is because countries rated as advanced in pet insurance, such as Sweden (subscription rate of 40%) and the United Kingdom (25%), do not have a fee system in place. Similarly, while the subscription rate is low, the pet insurance market in the United States has grown at an average rate of 25.9% over the past four years. The only countries that have introduced a fee system are Germany and Austria.
Candidate Kim's disclosure system has been evaluated as unremarkable. This is because the Ministry of Agriculture, Food and Rural Affairs has already been surveying and publishing veterinary medical fees nationwide since 2023. Candidate Kim approaches the issue by allowing hospitals to autonomously set medical fees while requiring disclosure for price comparison. It is claimed that increased competition among hospitals will lead to lower medical fees and reduced burdens.
Both the fee and disclosure systems are likely to face strong opposition from the veterinary industry. The Ministry of Agriculture, Food and Rural Affairs attempted to introduce a fee system in 2017, but it was abandoned due to opposition from veterinary associations. The veterinary industry argues that setting fees based on certain criteria is difficult and infringes on the autonomy of medical treatment. An insurance industry representative noted that 'while the implementation of a fee system or mandatory cost disclosure would be beneficial, there are doubts whether it would enhance the activation of pet insurance,' and added that 'public opinion and backlash from the industry are expected.'
The reason for the low pet insurance subscription rate of only 2% in South Korea is due to the high premiums. According to a report released by the Korea Insurance Development Institute in 2023, pet insurance premiums ranged from 40,000 to 50,000 won to 80,000 to 90,000 won. This is four times more expensive than the premium of 12,184 won for a third-generation health insurance policy for a 40-year-old male in 2020.
The insurance industry believes that the mandatory disclosure of medical records is urgent. Currently, animal hospitals have no obligation to issue medical records such as treatment records. Even if a pet insurance subscriber claims insurance benefits, the insurance company has no way to verify specific details.
If the medical records can be confirmed, insurance companies can accurately determine premiums and diversify coverage. The claims process for insurance benefits would also become smoother than it is now. The mandatory disclosure of medical records was included in the regulatory innovation agenda of the Yoon Suk-yeol government. Acting President Choi Sang-mok stated that this would be pursued in the second half of this year, but there is a possibility it could fall through due to the outcomes of the presidential election.
Previously, the Yoon Suk-yeol government included the revitalization of pet insurance as a state agenda and implemented various policies. It authorized the establishment of variable short-term insurers to encourage the entry of specialized pet insurance companies and pursued the mandatory disclosure of medical fees and medical records.
The insurance industry assesses that a foundation for revitalizing pet insurance has been established during the Yoon Suk-yeol administration. Previously, the Yoon Suk-yeol government promoted the mandatory disclosure of medical fees and medical records. It also encouraged the entry of specialized pet insurance companies through system improvements for establishing small short-term insurers. In November of last year, a pet insurance comparison and recommendation service was also implemented.
An insurance industry representative stated, 'If the mandatory disclosure of medical records becomes possible, it is expected that product diversification and expense efficiency will be possible,' adding, 'Above all, the convenience of pet insurance subscribers will increase.'