South Korean Dental Insurance Faces Challenges Despite Demand

SOUTH KOREA: According to a recent article published on http://koreabizwire.com/, the dental insurance sector in South Korea is experiencing significant turbulence. Several insurance companies have reportedly discontinued their dental insurance products due to worsening loss ratios, a trend that has sent ripples through the industry.

The article states that “Insurance Company A halted sales of dental insurance in 2021 with no plans to reintroduce such products.” This move was followed by “Insurance Company B [ceasing] dental insurance sales through legal insurance agencies (GAs) in April of last year.”

The primary cause for this retreat appears to be financial. As reported, loss ratios exceeding 100% indicate that insurers are paying out more in claims than they receive in premiums. This situation has become unsustainable for many providers, despite the typical monthly premiums for dental insurance being around 30,000 won.

Consumer Behavior Exacerbates Industry Woes

The article highlights a concerning trend in consumer behavior that is exacerbating the problem. Despite insurers implementing a minimum three-month waiting period before coverage begins, many policyholders are reportedly filing claims for treatments and then canceling their policies.

An insurance company representative explained the situation: “Many customers sign up for dental insurance knowing which teeth need treatment. Once they meet the claim requirements, they receive treatment and then cancel, leading to mounting losses for insurers.”

This behavior creates an ethical dilemma for consumers like Kim, a Seoul resident mentioned in the article, who was advised by an acquaintance to “sign up for multiple dental insurance policies, then cancel them after three months for a potential financial gain.”

Increasing Demand for Dental Care

Paradoxically, while insurers are retreating from the market, the demand for dental care in South Korea appears to be on the rise. The article cites data from the Health Insurance Review and Assessment Service showing an increase in dental outpatients from 22,933 in 2020 to 24,241 in 2022.

Furthermore, the number of dental insurance policyholders has grown substantially. A report from the Korea Credit Information Services indicates that policyholder numbers increased from 2.97 million in 2016 to 4.44 million in 2019.

Success Stories Amidst Challenges

Despite the challenges faced by many insurers, some companies have found success in the dental insurance market. The article mentions Lina Life Insurance, which “pioneered dental insurance in South Korea” and “celebrated its 15th anniversary last year, boasting 3 million cumulative policyholders and over 2 trillion won in paid claims.”

Future Outlook

The future of dental insurance in South Korea remains uncertain. An insurance industry insider quoted in the article stated, “Unlike insurers specializing in dental coverage, companies without operational expertise have seen loss ratios climb too high. We currently have no plans to launch new dental insurance products as they’re not our core business.”

This situation leaves consumers like Kim in a difficult position, balancing the need for affordable dental care against the diminishing availability of insurance options. As the market continues to evolve, it remains to be seen how insurers, regulators, and consumers will adapt to these challenges in the South Korean dental insurance landscape.