Auto Insurance Returns to Red for First Time in 6 Years… Unnecessary Treatments at Korean Medicine Hospitals Cited

The auto insurance sector posted a deficit of approximately 189 billion won in the first half of this year, snapping a six-year streak of profitability. The practice of some Korean medicine hospitals inducing unnecessary tests or prolonged hospitalizations for minor traffic accident patients and excessively claiming insurance payouts has been identified as a major cause of the deficit.

A Korean medicine hospital official claimed that they fabricated documents to make it look as though they performed manual therapy when they had actually prescribed nutritional IV drips. These hospitals also engaged in "factory-style" prescribing, bulk-dispensing pre-made herbal medicines to all patients regardless of their individual physical constitution. Police recently raided Jaseng Korean Medicine Hospital on suspicion of factory-style herbal prescribing and are investigating an 80 billion won insurance fraud scheme.

Last year, the average auto insurance treatment cost per patient at Korean medicine hospitals was 1.08 million won, more than triple that of conventional hospitals. These insurance leakages have pushed up the accumulated loss ratio of the top four non-life insurance companies by 1.9 percentage points compared to the same period last year.

As early as September, the government plans to introduce an "eight-week rule," requiring a separate review process for patients receiving treatment for minor accidents for more than eight weeks.