While the number of foreign nationals subscribing to domestic personal medical insurance is on the rise, it has been observed that the incurred losses and loss ratios of foreign policyholders under personal medical insurance have also increased.
According to the “Status of Foreign Nationals’ Personal Medical Insurance” data received by Representative Kang Min-kook’s office from the Financial Supervisory Service (FSS) on Oct. 6, the number of foreign nationals with insurance coverage has steadily increased since 2018, growing from 347,576 individuals to the current figure of 519,163 as of the end of July 2023. The total insurance benefits paid out from 2018 to July 2023 amounted to a whopping 667.2 billion won (US$494.59 million).
As the number of foreign residents in the country has increased, the analysis suggests a corresponding growth in the enrollment of foreign nationals in personal medical insurance. However, the concern lies in the fact that the incurred losses from personal medical insurance among foreigners are expanding at a higher rate compared to those among domestic policyholders.
When looking at the actual increase in losses incurred by domestic policyholders with personal medical insurance, it shows an increase from 11.66 trillion won in 2020 to 13.02 trillion won in 2021, or 11.7 percent, 13.19 trillion won in 2022, or 1.3 percent, and 8.47 trillion won as of July 2023.
During the same period, the growth rate of incurred losses for foreign nationals with personal medical insurance increased significantly, going from 130.2 billion won in 2020 to 148.7 billion won in 2021, or 14.2 percent, 162.4 billion won in 2022, or 9.2 percent, and 107.2 billion won as of July 2023, or 13.1 percent.
The fact that the loss ratio exceeds 100 percent means that policyholders are receiving more in insurance payouts than they have paid in premiums. It has been confirmed that the loss ratio for foreign nationals has deteriorated dramatically this year.
In fact, the loss ratio for domestic policyholders increased from 101.3 percent in 2022 to 104.5 percent as of July this year, showing a 3.2 percentage point rise. Meanwhile, the loss ratio for foreign nationals surged from 95.8 percent in 2022 to 104.3 percent as of July this year, marking an increase of 8.5 percentage points.
Among all foreign nationals with personal medical insurance, the largest group comprises 70.5 percent, or 366,126 individuals, who are Chinese nationals, and they have experienced even greater incurred losses.
Over the past six years, out of the total incurred losses of 768.3 billion won in foreign nationals’ personal medical insurance, 619.1 billion won, or 80.6 percent, was incurred by Chinese nationals. The figures have been rapidly increasing each year, rising from 78.5 billion won in 2018 to 98.4 billion won in 2019, 105.1 billion won in 2020, 119.6 billion won in 2021, and 131.2 billion won in 2022.
Moreover, in terms of the loss ratio for personal medical insurance, China ranks third with a ratio of 110.2 percent as of July 2023. Considering that Mongolia, which ranks first with a loss ratio of 119.9 percent, has only 4,878 policyholders, or 0.9 percent, and the United States, ranking second, has just 15,414 policyholders, or 3.0 percent, it can be predicted that the overwhelming losses are primarily due to the 366,126 policyholders, or 70.5 percent, of Chinese nationality, explained Representative Kang.
He pointed out, “In the case of foreigners, there have been incidents of insurance payouts leaking due to difficulties in verifying compliance with the obligation to report overseas investigations and incomplete disclosures of medical histories to receive insurance benefits, taking advantage of the inability to confirm such information. Particularly in the case of China, there is active content sharing on social media related to ‘how to claim payments from South Korean health and private insurance.’”
Kang further emphasized, “When foreign nationals enroll in personal medical insurance, the residency requirements related to dependents should be strengthened by amending the ‘Regulations on the Supervision of the Insurance Business’ and changing the acquisition criteria for insurance companies. Additionally, the FSS should significantly strengthen supervision of the insurance industry to ensure fair and reasonable claims assessment.”