"A pattern has taken hold where patients head to oriental medicine clinics first, instead of orthopedic clinics, even for minor fender-benders. The core driver behind the surge in oriental medicine treatment costs is a structure in which some medical institutions encourage prolonged hospitalization to inflate settlement amounts."
As the so-called "8-week rule," designed to curb excessive treatment of minor-injury auto insurance patients, faces growing uncertainty over its first-half implementation, frustration is mounting within the non-life insurance industry. Unnecessary long-term treatment of minor-injury patients, centered on oriental medicine clinics, continues to drain insurance payouts, prompting repeated calls for swift regulatory reform.
As of the end of last year, oriental medicine accounted for 60.4 percent of total auto insurance treatment costs, crossing the 60 percent threshold for the first time. The ratio stood at just 23.0 percent in 2015 but overtook Western medicine treatment costs at 54.6 percent in 2021 and has continued to rise. Insurance payouts for oriental medicine treatment reached 1.7 trillion won last year, roughly five times the 350 billion won recorded in 2015.
With the drain on auto insurance payouts worsening, the government is pushing regulatory changes including the 8-week rule. The rule requires patients with minor injuries classified as Grade 12 to 14 — such as simple contusions — to undergo a review by the Korea Automobile & Mobility Association if treatment extends beyond eight weeks.
The rule was initially scheduled to take effect early this year, but its implementation has been repeatedly delayed amid strong pushback from the oriental medicine community, which argues that the measure restricts patients' right to treatment. The relevant amendment to the Enforcement Decree of the Guarantee of Automobile Accident Compensation Act has cleared review by the Ministry of Government Legislation and awaits only Cabinet approval, but prospects for implementation within the first half remain clouded. Confusion is also spreading at the operational level, with the Korea Automobile & Mobility Association having posted and then withdrawn a job notice for personnel to run the 8-week rule.
As the timeline keeps slipping, discontent is growing inside and outside the non-life insurance industry. Cost burdens are mounting from measures such as premium discount riders tied to the 2-and-5 vehicle rotation system, while meaningful reform remains stalled.
The government's four-year freeze on auto insurance premium hikes resulted in a 708 billion won loss in the auto insurance segment last year. The cumulative loss ratio at Korea's four major non-life insurers — Samsung Fire & Marine Insurance (000810.KS), Hyundai Marine & Fire Insurance, DB Insurance and KB Insurance — stood at 85.9 percent in the first quarter of this year, up 3.4 percentage points from a year earlier. Given that a loss ratio above 80 percent makes deficits unavoidable, the first premium hike in five years has still failed to offset accumulated losses.
The Non-Life Insurance Division of the Korean Federation of Office and Financial Workers' Unions issued a statement demanding reform of the auto insurance system. "Implementation has been delayed due to external pressure from certain interest groups, and there is now even talk of a complete reexamination," said Eom Min-sik, head of the union's non-life insurance division. "A vicious cycle is taking hold in which moral hazard among fake patients and wrongful insurance claims are piling economic burdens on many honest policyholders."
