About 270,000 fee-for-service health insurances were sold to people with medical histories of illnesses within just 10 months. This indicates that a blind-spot within fee-for-service health insurance for people with medical histories has been solved. However, there are some concerns that insurance companies will face high loss ratio as there is a high chance that loss ratio of this fee-for-service health insurance will be greater than that of current fee-for-service health insurances.
According to ‘current state of sales of fee-for-service health insurance for people with medical histories’ announced by Financial Supervisory Service (FSS) on the 20th, total of 268,000 fee-for-service health insurances (221,000 indemnity insurances and 47,000 life insurances) were sold between April of 2018 and January of 2019.
Fee-for-service health insurance for people with medical histories is a political insurance that was created when Financial Services Commission (FSC) and FSS made requests to each insurance company to resolve a blind-spot within fee-for-service health insurance for consumers with illnesses such as high blood pressure or diabetes. This type of insurance drastically simplifies membership process as it eliminates many items for screening.
Currently 8 indemnity insurance companies such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and KB Insurance and 3 life insurance companies such as Samsung Life Insurance and Hanwha Life Insurance are providing this type of fee-for-service health insurance. In April alone, 49,000 insurances were sold. Since April, an average of 20,000 insurances had been sold monthly. 46.3% (124,000) and 33.8% (91,000) of people who joined this insurance are 60 years and over and are in their 50s respectively.
“This insurance is mainly for elders who are 50 years and over who had had difficulties in joining current fee-for-service health insurances.” said a representative for FSS.
Whenever elders with histories of illnesses in the past tried to join fee-for-service health insurances, most of them were rejected. Although there are insurances that guarantee hospitalization and surgery and cost of diagnosis of cancer and brain and heart diseases, insurance companies generally stop selling them in the middle due to low sales and high insurance loss ratio. However, this new type of fee-for-service health insurance now provides various insurance benefits to older generations and people with medical histories.
However, insurance industry is becoming more concerned as more of this insurance gets sold. Although this new insurance provides benefits to older generations, there is a high chance that loss ratio of this insurance will be higher than that of current fee-for-service health insurances as it is mainly comprised of older generations who are 50 years and over. According to FSS, loss ratio of personal fee-for-service health insurance during the first half of 2018 was 122.9%. Although this is lower than the loss ratio from the first half of 2017 (136.5%), it is still high. Usually, insurance companies lose money whenever a loss ratio goes over 100%.
“Although this new insurance is definitely needed as it resolves a blind-spot, we are concerned about it having a high loss ratio in the future.” said a representative for an insurance company. “As a result, insurance companies are not 100% happy with popularity of this new fee-for-service health insurance.”
Staff Reporter Park, Yoonho | yuno@etnews.com