South Korean insurance regulator, The Financial Supervisory Service (FSS), has directed insurers to inform consumers about the changes to claim review standards and measures to strengthen internal controls in advance.
At present, even when insurers change their claim review standards to reflect Supreme Court rulings, they are not obligated to inform consumers in advance. As a result, many consumers receive hospital treatment, trusting existing claim-payment practices, only to learn, after their claims are denied, that the insurer has changed its review standards.
Under the new administrative guidance, when insurers change claim review standards based on Supreme Court rulings, decisions by the FSS dispute mediation committee, or authoritative interpretations or administrative guidance from financial or health authorities, they will have to inform consumers in advance.
The new guidelines, however, exempt those changes that favour consumers or strengthen reviews to prevent insurance fraud, or where the risk of consumer harm is low, from this new requirement.
Insurers must provide individual notice to insureds on all policies to which significant review standard changes apply through at least two channels, such as Alimtalk and app push notifications, and must also disclose related information on their websites. The notice and disclosure must include the basis and intent of the change, the details of the change, the effective date, and contact information for inquiries.
Insurers are also required to maintain a gap of three working business days between informing the customers and implementing the new decisions.
The FSS has also strengthened insurers' controls. When changing claim review standards, insurers must establish standardised deliberation procedures to reflect the consumer perspective and enhance accountability.