Discussions surrounding the so-called '8-week rule' for managing treatment periods for minor injury patients have been ongoing for some time. The issue of over-treatment in auto insurance has also emerged as a significant social concern. Stakeholders, including the government, insurance companies, and the medical community, have acknowledged the need for improvements to the current system. There has been a consistent awareness that the financial burden on auto insurance is increasing due to prolonged treatments following minor accidents.
However, the '8-week rule' has yet to be formalized. As the process of reconciling differing opinions among stakeholders drags on, the loss ratio in auto insurance continues to rise, and payouts are steadily increasing. While the concerns are repeatedly voiced, progress on reform remains stagnant.
As of April this year, the cumulative loss ratio for auto insurance among five major property and casualty insurers reached 85.8%, a 2.5 percentage point increase compared to the same period last year. Despite raising premiums for the first time in five years at the beginning of the year, the trend of worsening loss ratios has not abated. Last year, the total losses from auto insurance across all insurers amounted to 708 billion won.
Auto insurance is a mandatory product, making it nearly a public good since vehicle owners cannot avoid enrollment. Therefore, the issue of payout leakage does not solely affect individual insurers' profits. The worsening loss ratio ultimately leads to increased premiums, which are distributed among all policyholders. Given that approximately 85% of auto insurance policyholders were accident-free drivers last year, it means that the majority of responsible drivers are shouldering the increased costs.
Some have pointed out that traditional Korean medicine is at the center of the over-treatment controversy. In particular, the focus on treating minor injury patients with traditional medicine has sparked debates over rising costs. In fact, traditional treatments for traffic accident victims have rapidly gained market share in the auto insurance sector. Last year, payouts for traditional medicine amounted to 1.6972 trillion won, accounting for 60.4% of total medical expenses. The average treatment cost per minor injury patient also exceeded 1 million won, nearly three times that of Western medicine, which averaged 355,000 won.
Advertisements for some traditional medicine hospitals and clinics prominently feature phrases like 'traffic accident,' 'auto insurance coverage,' and 'no out-of-pocket expenses.' Some medical institutions attract patients by emphasizing their management of the entire process from accident reporting to treatment and settlement. While this can be seen as guidance for patients in need of treatment, it also raises concerns that traffic accident care is being perceived as a type of 'insurance benefit.'
Unlike general health insurance, auto insurance treatments involve minimal out-of-pocket expenses for patients, leading to a perception of low costs associated with treatment frequency. This has contributed to a structure where long-term treatment follows even minor accidents. Ultimately, the essence of the controversy is not about traditional medicine itself, but rather whether the current structure, which makes it difficult to feel the financial burden, is incentivizing over-treatment.
The traditional medicine community has expressed the strongest concerns regarding the implementation of the '8-week rule.' The Korean Medicine Association opposes the rule, arguing that if the 8-week limit is enforced, the treatment costs that auto insurance would cover may shift to health insurance.
The '8-week rule' does not propose a blanket cessation of treatment after eight weeks. Instead, it aims to ensure that any treatment exceeding eight weeks undergoes additional review to confirm its necessity. Nevertheless, discussions about implementing this rule have been stagnant for years. The Ministry of Land, Infrastructure and Transport, which oversees the Automobile Damage Compensation Act, maintains that it must reconcile the concerns and objections of stakeholders. However, the longer the negotiations take, the more delayed the reforms become, and the greater the financial burden will be.
While the Ministry continues to take a cautious approach, policies should not end at the review stage. They must lead to conclusions that balance interests and minimize social costs. As decisions are postponed due to conflicts, payouts continue, and the loss ratio rises. Ultimately, the public bears the burden of these costs.
* This article has been translated by AI.
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