SEOUL, Aug. 21 (Korea Bizwire) – Kim, a resident of Seoul, had avoided visiting the dentist for years, but recent problems with swollen gums and sensitive teeth pushed him to consider dental insurance. The high cost of individual treatments like inlays and crowns, often reaching hundreds of thousands of won, made him anxious about potential expenses.
However, Kim now faces a moral dilemma. A friend suggested that he could sign up for several dental insurance plans and then cancel them after three months to potentially gain financially.
This situation sheds light on a rising issue in South Korea’s insurance sector. Industry insiders have noted that some insurance companies are pulling back from offering dental insurance due to increasing loss ratios.
Insurance Company A, for example, stopped selling dental insurance in 2021 and has no plans to reintroduce these products. Similarly, Insurance Company B halted dental insurance sales through legal insurance agencies (GAs) in April of last year.
The reason behind these moves is the climbing loss ratios, which have surpassed 100%. This means insurers are paying out more in claims than they are receiving in premiums. Typically, dental insurance premiums are around 30,000 won per month.
To counter this, insurers have introduced a minimum three-month waiting period before coverage kicks in, aiming to lower the loss ratios. However, many policyholders take advantage of this system by filing claims for treatments soon after the waiting period ends and then canceling their policies, worsening the issue.
An insurance company representative explained, “A lot of customers enroll in dental insurance already knowing which teeth need treatment. Once they qualify for claims, they get the treatment and then cancel the policy, which leads to significant losses for insurers.”
Meanwhile, the number of dental patients in South Korea continues to grow. Data from the Health Insurance Review and Assessment Service shows an increase in dental outpatients from 22,933 in 2020 to 24,241 in 2022.
The number of dental insurance policyholders has also risen, from 2.97 million in 2016 to 4.44 million in 2019, according to a report by Korea Credit Information Services.
Lina Life Insurance, which was the first to offer dental insurance in South Korea, marked its 15th anniversary last year. The company has amassed 3 million cumulative policyholders and paid out over 2 trillion won in claims.
Another industry insider commented, “Companies that do not specialize in dental coverage are seeing their loss ratios increase to unsustainable levels. We do not plan to launch new dental insurance products as they are not part of our core business.”