The issue of discrepancies in accident insurance payouts has drawn attention in Korea. A recent audit report highlights major inconsistencies in how insurers handle “future treatment” payouts, which are intended to cover ongoing care after a traffic accident.
A recent case illustrates the problem. Yoo, a 42-year-old office worker, was rear-ended while waiting at a traffic light. Following the accident, he sought physical therapy for persistent back pain. The insurer for the at-fault driver offered Yoo 1 million won ($715) on the condition that he not file further claims. Yoo realized that ongoing treatment might lead to higher payouts, reflecting a common practice in the industry.
The Board of Audit and Inspection (BAI) report, released on Wednesday, revealed that insurers paid 1.75 trillion won in future treatment payouts in 2023. These payouts accounted for nearly half of all treatment-related payouts that year, totaling 46.8%. The amount paid for future treatment closely matched what was reimbursed for actual hospital treatments, which amounted to 1.91 trillion won.
However, the payouts were inconsistent, with vast differences between insurers. A sample of 2,645 cases across 12 insurance companies showed payouts for similar injuries varied widely. For example, one insurer paid as little as 102,000 won, while another paid up to 6.56 million won for grade 14 sprain injuries, creating a discrepancy of more than 64 times.
The BAI also found that insurers were offering lump-sum payouts to patients with minor injuries, often in exchange for not filing further claims. These payouts are intended to cover ongoing care, but the guidelines for what constitutes “future treatment” are unclear. The audit found that 83% of future treatment payouts went to patients with minor injuries that did not require long-term care. In fact, only 15.8% of patients who received future treatment payouts between 2019 and 2022 returned for further treatment within six months.
Another issue is double-dipping, where individuals receive both insurance payouts and National Health Insurance Service (NHIS) benefits for the same treatment. From 2019 to 2022, about 370,000 people received a combined 476.9 billion won in future treatment payouts, while also collecting 82.2 billion won in NHIS-covered treatment expenses. This practice appears to be a case of duplicate compensation, according to the BAI.
The audit also revealed that the NHIS overpaid 61.1 billion won to 32,000 people from January 2022 to June 2024. This overpayment occurred because NHIS could not track these cases due to a lack of data-sharing with insurers.
The BAI has urged the Ministry of Land, Infrastructure and Transport and the Financial Services Commission (FSC) to develop a legal framework to regulate future treatment payouts. This framework would include clear guidelines for payouts and would facilitate better data-sharing between NHIS and insurers to prevent duplicate compensation. An official from the FSC said, “We are moving toward banning future treatment payouts for minor injuries and setting clear criteria for more severe cases in standard insurance contracts.”
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