Mandatory Notification and Disclosure of Insurance Claim Review Standard Changes... Fewer Denials and Disputes Expected

FSS to Implement Administrative Guidance on June 22
Disclosure Required for Changes in Insurance Claim Payment Standards
Basis, Details, Effective Date, and Contact Information Must Be Provided

Going forward, insurance companies will be required to notify consumers in advance and establish standardized review procedures whenever insurance claim review standards are changed in accordance with decisions by the Supreme Court, financial or health authorities. This is expected to alleviate information asymmetry between consumers and insurers, and reduce moral hazard—where some brokers or medical institutions recommend expensive procedures to consumers who are unaware of changes to insurance claim review standards.

On June 21, the Financial Supervisory Service announced that it would implement administrative guidance, including mandatory disclosure of changes to insurance claim review standards, starting the following day. This initiative is part of the 'Financial Consumer Protection Improvement Roadmap' project.

Until now, insurers had no obligation to notify consumers in advance when insurance claim review standards were changed due to Supreme Court rulings, decisions by the Financial Supervisory Service Dispute Mediation Committee, or interpretations and administrative guidance from financial and health authorities. As a result, consumers often relied on existing payment practices when receiving treatment, only to discover the changes to insurance claim review standards after their claims were denied.

First, insurers must notify consumers in advance when there are significant changes to review standards. Notifications must be made through at least two channels, such as messaging apps or application push notifications, and must also be disclosed on the company's website. These notifications and disclosures must include the basis and purpose for the 'significant change to review standards,' the details of the changes, the effective date, and contact information. In addition, insurers must apply the new review standards only after at least three business days have passed since the day consumers were notified.

Insurers will also be required to strengthen internal controls. When changing insurance claim review standards, a standardized review process must be established in accordance with mandatory requirements. These requirements include: ▲ Mandatory participation of executives in charge of insurance claim review, consumer protection, and legal affairs ▲ Final approval by an executive or higher, with compliance oversight reflected in the process ▲ Prior review by consumer protection, legal, and insurance claim review departments before the item is submitted for consideration. As a result, insurers must notify consumers of changes that could disadvantage them, strictly following standardized procedures.

In addition, significant changes to review standards that must be communicated to consumers must be resolved by the responsible executive. Previously, the decision-maker and procedures for significant changes to review standards varied from insurer to insurer. From now on, the process will include: ▲ Prior review by consumer, legal, and review departments ▲ Committee deliberation with participation from consumer and legal department executives ▲ Executive approval and agreement by the compliance officer ▲ Disclosure on the website and individual notifications to consumers.

As a result, consumers will become aware of changes to insurance claim payment standards not after receiving medical treatment and having their claim denied, as was often the case before, but in advance, through review standard change disclosures prior to undergoing medical procedures.

An official from the Financial Supervisory Service stated, "After the implementation of the administrative guidance, we expect that consumers will be able to make more rational medical and insurance decisions, leading to a reduction in insurance claim disputes. The objectivity and transparency of insurers' claim review processes will be enhanced, and the recommendation of expensive procedures by some brokers and medical institutions will be curbed, thereby reducing unnecessary medical expenses for consumers."

This content was produced with the assistance of AI translation services.