Children can now file insurance claims for parents with dementia — no privacy consent required

South Korea's insurance proxy claimant system — designed to help policyholders who cannot file claims themselves, such as those with dementia — is being overhauled. Spouses and direct-line relatives will be able to file claims on a policyholder's behalf without being named in advance, and the process will no longer require personal data consent, making it easier for consumers to set up.

The Financial Supervisory Service announced Monday it would reform the proxy claimant designation system for insurance products, targeting policyholders who may be unable to file claims due to dementia or similar conditions.

Under the current system, insurers operating dementia policies allow policyholders to designate someone to file claims on their behalf — a safeguard against the risk that a person with dementia may forget they hold a policy. However, the process requires both naming a specific individual and obtaining their personal data consent. That procedural burden has weighed on adoption: the proxy designation rate fell from 26 percent in 2021 to 23.1 percent in the first half of this year. Meanwhile, demand for dementia insurance has surged, with new policy contracts rising 93.9 percent over four years — from 341,165 in 2021 to 661,449 last year.

In response, the FSS will introduce an "unnamed proxy claimant" system that allows a spouse or direct-line relative to file a claim without being designated by name in advance, removing the personal data consent requirement entirely. To guard against financial fraud, however, eligibility will be limited to spouses and direct-line relatives, and any insurance payout will be deposited into the beneficiary's — that is, the policyholder's — account rather than the proxy claimant's.

In addition, the personal data fields required when designating a named proxy claimant will be streamlined to the minimum: name, contact information, identification number and relationship to the policyholder. The system will also be expanded beyond dementia insurance to cover cancer, brain and cardiovascular policies.

The FSS cautioned, however, that even policyholders with valid coverage may be unable to claim benefits if they forget they hold a policy after dementia or a similar condition sets in. The regulator urged anyone with dementia insurance or related policies to designate a proxy claimant in advance — whether named or unnamed. It also advised policyholders to inform the person they intend to designate, so that individual can act immediately when the need arises.

Insurers issuing new contracts will implement the changes starting July 1, and existing dementia insurance policyholders will be notified via messaging services and given the opportunity to enroll under the revised system.