Insurance Industry Faces scrutiny as Medical Advisory Use Declines
SEOUL, Sept. 1, 2025 – South Korean financial authorities are intensifying consumer protection measures, prompting a likely reduction in the use of medical advisory services by insurance companies, especially within the non-life insurance sector. This shift comes as data reveals a disparity in how life and non-life insurers utilize these reviews, and the resulting impact on claim payouts.
Non-life insurers recorded a medical advisory implementation rate of 0.1% in the first half of the year, with Samsung Fire Insurance at 0.09%, DB Insurance at 0.03%,Hyundai Maritime at 0.04%, Meritz Fire at 0.06%, and KB Insurance at 0.06%. While the non-life insurance industry utilizes medical advisory more frequently – averaging 1,504 cases compared to 344 in the life insurance industry - the benefit derived from denying claims through these reviews is proportionally higher in life insurance.
Medical advisory is a process where insurers consult specialists to determine claim validity. Despite using medical advisory less frequently enough, the life insurance industry saw an average benefit of 30.99% from non-payment of claims via these reviews, significantly exceeding the 15.51% rate observed in the non-life insurance sector. However, the life insurance industry reviewed fewer cases averaging 106 compared to 144 in the non-life sector.
The Financial Supervisory Service (FSS) is restructuring to prioritize financial consumer protection, elevating the Financial Consumer Protection Agency to the Consumer Protection Headquarters and establishing a Financial Consumer Protection Committee directly under the director. ”It is expected to refrain from medical advisory that can cause needless disputes,” an industry official stated, anticipating a decrease in the practice due to increased regulatory pressure.
