Industry insiders have reported that some insurance companies are discontinuing dental insurance products due to worsening loss ratios. (Image courtesy of Yonhap)
SEOUL, Aug. 21 (Korea Bizwire) – Kim, a Seoul resident who has long avoided dental check-ups, recently began exploring dental insurance options after experiencing swollen gums and sensitive teeth. With individual inlays and crowns costing hundreds of thousands of won, the potential treatment expenses are daunting.
However, Kim faces an ethical dilemma after hearing advice from an acquaintance: sign up for multiple dental insurance policies, then cancel them after three months for a potential financial gain.
This scenario highlights a growing concern in South Korea’s insurance industry. Industry insiders have reported that some insurance companies are discontinuing dental insurance products due to worsening loss ratios.
Insurance Company A halted sales of dental insurance in 2021 with no plans to reintroduce such products. Similarly, Insurance Company B ceased dental insurance sales through legal insurance agencies (GAs) in April of last year.
The insurance sector attributes these decisions to loss ratios exceeding 100%, indicating that insurers are paying out more in claims than they receive in premiums. Typically, monthly premiums for dental insurance hover around 30,000 won.
Despite insurers implementing a minimum three-month waiting period before coverage begins, in an attempt to improve loss ratios, many policyholders are filing claims for treatments and then canceling their policies, exacerbating the problem.
An insurance company representative explained, “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.”
Paradoxically, the number of dental outpatients is on the rise. Data from the Health Insurance Review and Assessment Service shows patient numbers increasing from 22,933 in 2020 to 24,241 in 2022.
The number of dental insurance policyholders has also grown, from 2.97 million in 2016 to 4.44 million in 2019, according to a report from the Korea Credit Information Services.
Lina Life Insurance, which pioneered dental insurance in South Korea, celebrated its 15th anniversary last year, boasting 3 million cumulative policyholders and over 2 trillion won in paid claims.
Another insurance industry insider noted, “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.”
Lina Jang (linajang@koreabizwire.com)
