Premiums for Korea's private health insurance, known as silson (indemnity health insurance), will rise an average of 7.8% next year as losses mount due to excessive medical treatments. Fourth-generation silson policies currently on sale are expected to see increases approaching 20%.
The Korea Non-Life Insurance Association and the Korea Life Insurance Association announced on December 23 that the overall average premium increase for silson insurance next year has been calculated at approximately 7.8%. This is 1.2 percentage points lower than the 9% average annual increase over the past five years.
Specifically, first-generation policies will see increases in the 3% range and second-generation in the 5% range, while third-generation premiums are projected to jump about 16% and fourth-generation about 20%. Insurers' risk loss ratio for silson insurance stood at 119.3% as of the third quarter of this year, up from 116.6% last year. The total loss amount reached 2.1 trillion won ($1.5 billion).
"The premium increase rate is an industry average and does not apply uniformly to all policyholders," the associations explained.
The average 7.8% increase in silson premiums—often called "the second national health insurance"—reflects growing losses in the silson insurance sector. The 7.8% increase for next year is 0.3 percentage points higher than this year's increase of 7.5%. Cumulative premium increases over the five years from 2022 to next year will average 46.3%.
Fourth-generation silson insurance faces particularly steep increases. With 5.25 million policyholders enrolled in fourth-generation plans, their premium burden is expected to rise sharply. "Increase rates vary depending on the product renewal cycle, type, and policyholder age and gender," an insurance industry official said. "Policyholders should check the premium renewal notice sent by their insurer to see how much their premiums will rise."
Silson insurance is classified into first through fourth generations based on enrollment date. First-generation refers to products sold until September 2009, second-generation until March 2017, and third-generation until June 2021. Fourth-generation products are currently on sale. Third and fourth-generation silson insurance premiums are renewed annually, making premium fluctuations more noticeable. First-generation premiums are adjusted every three to five years, and second-generation every one to three years.
Premium increase rates vary by enrollment period. Earlier enrollment means broader coverage but higher premiums. For men in their 40s, the average monthly premium this year was 54,000 won for first-generation policies, 34,000 won for second-generation, 23,000 won for third-generation, and 15,000 won for fourth-generation. Fourth-generation premiums are expected to rise to approximately 18,000 won per month next year, adding about 36,000 won annually to policyholders' costs.
Financial industry experts cite chronic losses as the reason for the sharp premium increase. According to the Korea Insurance Research Institute, the cumulative risk loss ratio for fourth-generation silson insurance reached 147.9% as of the third quarter this year, up 15.5 percentage points from 132.4% at the end of last year. A loss ratio above 100% means insurers are losing money on silson insurance.
Third-generation policies show a loss ratio of 138.8%, while first-generation stands at 113.2% and second-generation at 112.6%. Insurers estimate annual losses of around 2 trillion won from silson insurance.
The losses are driven by certain non-covered medical services such as manual therapy and MRI scans. Unlike covered services, hospitals can set their own prices for non-covered items. Critics point out that consumers have strong incentives to "shop" for medical services since silson insurance covers costs regardless of how high the bills are.
Silson insurance payouts have been steadily increasing, particularly for non-covered services. The five major non-life insurers—Samsung, DB, Hyundai, KB, and Meritz—paid out a total of 8.48 trillion won in silson claims from January to September this year, up 13.1% from the same period last year. Orthopedics, which includes many non-covered services such as manual therapy, accounted for 22.3% of total payouts.
The government plans to curb excessive non-covered treatments through fifth-generation silson insurance, which will exclude non-covered medical services such as cosmetic and plastic surgery procedures from coverage. Separately, the Ministry of Health and Welfare recently designated three non-covered items—manual therapy, radiation hyperthermia, and percutaneous epidural neuroplasty—as managed services. Managed service designation raises the patient copayment rate to as high as 95% and strengthens supervision of treatment fees and coverage standards.
