▲ Financial Supervisory Service (FSS)
Starting June 22, insurance companies will be required to provide prior notification to consumers if they change their insurance claim review criteria in a way that is disadvantageous to policyholders.
The Financial Supervisory Service (FSS) announced on June 21 that it is issuing administrative guidance to mandate such notifications when review criteria are altered during the term of an insurance contract, and to strengthen internal controls within insurance companies.
This administrative guidance is a measure to reduce disputes and complaints in conjunction with the launch of the 5th generation indemnity health insurance, and it is one of the tasks under the 'Financial Consumer Protection Improvement Roadmap' currently being pursued by the FSS.
The FSS emphasized that insurance companies must notify consumers in advance when changing review criteria based on Supreme Court rulings, decisions by the FSS Dispute Mediation Committee, or authoritative interpretations and administrative guidance from financial and health authorities.
Insurance companies must provide notice to affected policyholders through at least two channels and must also disclose the changes on their websites.
The notification must include the grounds and purpose of the change, the specific details of the change, the effective date, and contact information.
The updated review criteria can only be applied at least three business days after the consumer notification has been provided.
The intention is to ensure that consumers are aware of the changed criteria before undergoing medical procedures.
The consumer notification obligation under this administrative guidance will take effect tomorrow, June 22.
However, changes that are favorable to consumers, as well as those involving pension, retirement, guarantee, and reinsurance products—where the risk of consumer harm is considered low—are excluded from the notification requirement.
The policy was introduced last month for indemnity health insurance, which frequently sees high volumes of complaints and disputes.
To strengthen the accountability of insurance companies regarding changes to review criteria, the FSS has also required the establishment of standardized internal review procedures.
Accordingly, insurance companies must undergo procedures including: ▲ mandatory participation of executives in charge of insurance claims, consumer protection, and legal affairs; ▲ final approval by an executive or higher, with checks and balances from the compliance officer; and ▲ prior review by departments responsible for consumer protection, legal affairs, and insurance claims before an agenda item is submitted.
The FSS stated, "This will alleviate the information asymmetry where consumers only learn about changed review criteria after filing an insurance claim, enabling more rational decision-making by consumers." The agency added, "We expect that increased transparency in insurance companies will also help prevent the recommendation of high-cost procedures by brokers or certain medical institutions in the healthcare market."
(Photo: Yonhap News TV, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.