The implementation of the so-called '8-week rule,' which separately assesses the need for long-term treatment for minor injury victims of traffic accidents, has passed its final hurdle, raising expectations for improvements in auto insurance loss ratios. The insurance industry believes this is an opportunity to address high-cost treatment practices, such as the repeated billing of various traditional medicine treatments, known as 'set billing,' regardless of patient condition.
On August 4, the government approved a revision to the enforcement decree of the Automobile Compensation Guarantee Act during a Cabinet meeting. According to the revision, minor injury victims classified as grades 12 to 14 must undergo a review by a medical professional to receive auto insurance coverage for treatment costs beyond eight weeks from the date of the accident.
The Automobile Accident Compensation Promotion Agency will oversee the review process, with over 200 medical and traditional medicine specialists, each with more than ten years of experience in general hospitals, appointed as reviewers. The revised rule will take effect on September 10.
The non-life insurance industry anticipates that this new system will help reduce unnecessary long-term treatments for minor injury victims, contributing to an improvement in auto insurance loss ratios. The cumulative loss ratio for auto insurance among four major non-life insurers—Samsung Fire & Marine, Hyundai Marine & Fire, DB Insurance, and KB Insurance—averaged 84.5% in the first half of this year, an increase of 1.9 percentage points compared to the same period last year.
The rise in loss ratios has negatively impacted the profitability of auto insurance. Non-life insurers reported a loss of 189 billion won in the auto insurance sector during the first half of this year, marking the first deficit in six years for this period since 2020.
Factors contributing to the worsening loss ratios include rising auto repair costs, parts prices, and wages for day laborers, along with the long-term treatment of minor injury victims and certain over-treatment practices.
According to the Ministry of Land, Infrastructure and Transport, the number of minor injury victims from traffic accidents decreased from 1.554 million in 2019 to 1.488 million in 2024, reflecting an average annual decline of 0.9%. In contrast, treatment costs for these victims rose from 1 trillion won to 1.41 trillion won during the same period, showing an average annual increase of 7.0%. While the number of patients has decreased, the per capita treatment cost burden has increased.
Industry experts argue that further improvements are needed regarding 'set billing,' which standardizes the implementation and billing of various traditional medicine treatments, such as acupuncture, moxibustion, and herbal injections, regardless of patient condition. Last year, set billing accounted for 64.4% of the 817.4 billion won in outpatient treatment costs for traditional medicine among the four major non-life insurers.
However, some in the medical community have raised concerns that a uniform treatment duration standard may not adequately reflect individual recovery rates and treatment needs. They emphasize the need for objective criteria and an appeals process to ensure that patients requiring treatment are not denied coverage during the review process.
An insurance industry representative stated, "The implementation of the 8-week rule could be a starting point to reduce unnecessary long-term treatments and insurance payouts. It is essential to protect the rights of patients who need treatment while also pursuing subsequent reforms to address high-cost treatment practices like set billing."
* This article has been translated by AI.
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