South Korean auto insurance portfolios have posted deficits in profits in the first half of 2026, for the first time in six years.
According to a news report in Maeil Business news website, excessive treatment by oriental hospitals for ordinary patients is the main cause of the rise in car insurance loss rates. A release issued by Health Insurance Review and Assessment Service on 30 July 2026 said that the cost of oriental medicine treatment last year (2025) was KRW1.69tn ($693m), up 5.1% from 2024. During the same period, medical expenses increased only 0.1% to KRW1.106tn.
In particular, it was found that hospitalisation measures for ordinary patients with auto insurance are being abused, especially in oriental medicine hospitals. Oriental Medicine hospitals are the ones that integrate traditional herbal remedies and acupuncture with modern medicine diagnostic techniques.
According to an analysis of 100 medical institutions (as of June 2026) with the highest auto insurance hospitalisation rate of a large domestic non-life insurance company, all of the top 10 places with high hospitalisation rates for current patients were oriental medicine hospitals and oriental clinics.
In the insurance industry, there are growing calls for the introduction of the "eight-week rule," which is currently being considered by the Ministry of Land, Infrastructure and Transport, as a minimum device to prevent excessive hospitalization of so-called Nylon patients.
The eight-week rule is a system that requires ordinary patients (grade 12 to 14) to be screened if they are treated for more than eight weeks.
In the first half of this year, insurers posted a loss of KRW18bn in auto insurance, marking the first loss in six years. The cumulative loss ratio of four large non-life insurers was 84.5%, up 1.9 percentage points from the same period in 2025.. The break-even loss ratio of auto insurance is usually estimated to be around 80%.