Insurers Must Announce Changes to Claim Review Standards in Advance

Insurance companies in South Korea must now inform policyholders in advance if they alter claim payment standards to the consumer's disadvantage, such as due to Supreme Court rulings. This new guideline aims to address the issue of policyholders being unexpectedly denied claims after undergoing medical treatment based on previously understood practices.

The Financial Supervisory Service (FSS) announced on March 21 that it is implementing the 'Guideline for Advance Notification of Changes in Claim Review Standards' as an administrative directive. Starting March 22, insurers must notify all policyholders affected by changes in claim review standards. These changes can stem from Supreme Court rulings, FSS dispute mediation decisions, or official interpretations and administrative guidance from financial and health authorities.

Insurers are required to use at least two methods of communication, such as notification messages, app push notifications, or text messages, to inform policyholders individually. The company's website must also publicly announce the changes. The notification and public disclosure must include the basis and purpose of the change, the details of the modification, the effective date, and contact information.

The revised claim review standards can only be applied at least three business days after the notification date. If an insurance incident occurs before the notification, the claim will be paid according to the existing standards, regardless of when the claim is filed. However, changes that benefit consumers or strengthen claim reviews to prevent insurance fraud, with low risk of consumer harm, do not require advance notification.

Furthermore, the process for changing claim review standards, which previously varied among insurers, will be standardized. Insurers must undergo a standardized review process involving executives from claims review, consumer protection, and legal departments for any changes disadvantageous to consumers. The final decision will be made by an executive-level employee, with the compliance officer verifying adherence to relevant laws and internal regulations. The FSS anticipates that this will alleviate information asymmetry, enable more rational medical and insurance decisions, and reduce claim disputes.

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The information asymmetry problem, where policyholders only learn about changed review standards after filing a claim, will be alleviated, enabling rational medical and insurance decision-making and reducing insurance claim disputes.