![Auto insurance claims for traditional Korean medicine treatments neared 900 billion won in the first half of this year, hitting an all-time high amid a pattern of excessive billing at some TCM facilities. As patients increasingly gravitate toward TCM clinics — exploiting a structural loophole that leaves them with no out-of-pocket costs — the resulting rise in loss ratios is ultimately passed on to policyholders. [Created using Gemini]](https://wimg.heraldcorp.com/news/cms/2026/08/07/news-p.v1.20260806.f8b10265e2754b5e88c05c836ab4de0a_P1.png)
A patient who visited a traditional Korean medicine hospital after a traffic accident was handed an intake questionnaire with a section asking them to rate their pain on a numerical scale. The options started at 5. Scores from 0 to 4 — representing little to no pain — had been removed entirely. Without knowing this, the patient had no choice but to select 5 or higher, no matter how mild the discomfort. That score then became the basis for billing, and the justification for hospitalization and an MRI scan. A course of treatment that might have cost 300,000 to 400,000 won ($282) on an outpatient basis ballooned to well over 2 million won once hospitalization and imaging were added.
The intake form used by a traditional Korean medicine hospital in Ulsan appeared flawless on paper. Medical records and billing documents were filled out in full compliance with regulations, allowing the claims to slip through the review process undetected. A non-life insurer discovered the practice after receiving an anonymous tip and sending an employee in as an undercover patient to observe the intake procedure firsthand. The investigation also revealed that nurses at the facility were taking patients for X-rays before a physician had even examined them.
The insurance industry has concluded that excessive and fraudulent billing — the kind that cannot easily be caught through document reviews alone — is on the rise, even as a structural pattern has taken hold in which 60% of all auto insurance medical payments flow to traditional Korean medicine providers.
According to industry data drawn from Health Insurance Review and Assessment Service statistics on auto insurance medical costs, total auto insurance medical payments in the first half of this year reached 1.51 trillion won — up 11% from the same period last year and the highest first-half figure on record.
Of that total, traditional Korean medicine accounted for 894.7 billion won, outpacing Western medicine at 610.9 billion won by nearly 300 billion won. Compared with the first half of 2021, TCM costs have risen 43.9% while Western medicine costs grew just 13%. TCM's share of total auto insurance medical spending has also climbed from 53.5% to 59.4%.
The tilt toward minor-injury patients is equally pronounced. Among patients classified as minor injuries at severity grades 12 through 14, the number seeking treatment at TCM facilities rose an average of 5.3% per year from 2020 to 2025, while the number using Western medical facilities fell 2.6% over the same period. Last year, the per-patient treatment cost at TCM providers was 1.08 million won — 3.1 times the 350,000 won recorded at Western medical facilities.
The contrast with national health insurance data makes the trend even starker. Last year, TCM accounted for just 2.8% of total national health insurance medical spending. The figures suggest that patients with neck or back pain are far more likely to seek TCM care when their injuries are covered by auto insurance than when they are covered by national health insurance.
The insurance industry points to the cost structure of auto insurance — under which patients pay nothing out of pocket — as one of the root causes. Under the liability coverage provisions of auto insurance, the at-fault driver's insurer covers the other party's medical bills in full. Patients have no financial incentive to limit treatment, and a longer treatment period can also influence future compensation settlements. For medical providers, more billable services mean higher sales, while insurers conduct most of their reviews after the fact, based on documents submitted once treatment is complete.
One major non-life insurer analyzed the top 100 hospitals by treatment costs for its minor-injury patients and found that all 10 facilities with the highest admission rates were traditional Korean medicine hospitals or clinics. Their admission rates ranged from 72% to 80%, averaging 76% — roughly four times the 19.6% average for Western medical facilities.
Detected insurance fraud is also rising sharply. The same insurer said the value of TCM-related insurance fraud it uncovered in the first half of this year jumped 150% from the same period last year, with the number of cases up 75%. However, 57% of detected cases involved false claims for herbal medicine prescriptions — a category that is relatively easy to verify by cross-checking billing records.
By contrast, cases involving falsified medical records, fictitious hospitalizations or patient kickbacks are far harder to document and often come to light only through insider tips. That is why some in the industry warn that the cases currently being caught may represent only a fraction of the actual fraudulent billing taking place.
The financial burden ultimately falls on auto insurance policyholders. Non-life insurers posted a combined loss of 189 billion won on auto insurance in the first half of this year, recording a first-half deficit for the first time in six years. Although they raised premiums in February for the first time in five years, the loss ratio — the share of premiums paid out in claims — still exceeds 80%, the level generally regarded as the break-even threshold.
Starting Sept. 10, minor-injury patients who wish to continue treatment beyond eight weeks will be required to undergo a review by a specialist affiliated with the Korea Road Traffic Authority. Still, the insurance industry cautions that a review focused primarily on treatment duration has limited ability to screen for excessive hospitalization, repeated procedures or falsified medical records.
"Confirmed insurance fraud cases are only a tiny fraction of the problem," an insurance industry official said. "Excessive billing that never reaches the detection stage may well be the main source of benefit leakage." The official added that the industry needs to examine whether what began as misconduct at individual facilities has hardened into a sector-wide practice.
psj@heraldcorp.com
