Current situation and issue of Industrial Accident Compensation insurance.

Abstract

Industrial Accident Compensation Insurance (IACI) has a history of about 50 yr, and is the oldest social insurance system in Korea. After more than 20 times of revision improvements in benefits, its contents and claim systems have been upgraded. It became the protector of injured workers and their families, and at the same time became the system which could cope with both financial burden of employers and their responsibilities. However, there are some issues to be reformed to upgrade the IACI: 1) the problems in the approval system of occupational diseases, 2) quality improvement of workers' compensation medical care, 3) vocational rehabilitation and return to work, 4) workers' compensation premiums and out-of-pocket money of injured workers, 5) issues in application of IACI. Growth of IACI cannot be achieved by an effort of an individual. Efforts by workers, owners, and government, in addition to physicians and welfare professionals toward the same goal are required for the next level improvement of IACI.

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Current Situation and Issue of Industrial Accident Compensation
Insurance
Industrial Accident Compensation Insurance (IACI) has a history of about 50 yr, and is the
oldest social insurance system in Korea. After more than 20 times of revision improvements
in benefits, its contents and claim systems have been upgraded. It became the protector of
injured workers and their families, and at the same time became the system which could
cope with both financial burden of employers and their responsibilities. However, there are
some issues to be reformed to upgrade the IACI: 1) the problems in the approval system of
occupational diseases, 2) quality improvement of workers‘ compensation medical care,
3) vocational rehabilitation and return to work, 4) workers‘ compensation premiums and
out-of-pocket money of injured workers, 5) issues in application of IACI. Growth of IACI
cannot be achieved by an effort of an individual. Efforts by workers, owners, and
government, in addition to physicians and welfare professionals toward the same goal are
required for the next level improvement of IACI.
Key Words: Workers’ Compensation; Occupational Disease; Occupational Injury; Medical
Care; Return to Work
Inah Kim1, Jeongbae Rhie2, Jo-Duk Yoon3,
Jinsoo Kim4, and Jonguk Won2
1Graduate School of Public Health, Yonsei University,
Seoul; 2College of Medicine and Institute for
Occupational Health, Yonsei University, Seoul;
3Korean Social Policy Institute, Seoul; 4School of
Social Welfare, Yonsei University, Seoul, Korea
Received: 25 May 2011
Accepted: 7 November 2011
Address for Correspondence:
Jonguk Won, MD
Department of Preventive Medicine & Public Health, College of
Medicine Yonsei University, 50 Yonsei-ro, Seodaemoon-gu,
Seoul 120-752, Korea
Tel: +82.2-2228-1872, Fax: +82.2-392-8622
E-mail: juwon@yuhs.ac
http://dx.doi.org/10.3346/jkms.2012.27.S.S47 • J Korean Med Sci 2012; 27: S47-54
ORIGINAL ARTICLE
INTRODUCTION
The historical origins of workers’ compensation insurance could
be found first in Germany. Germany enacted the employers’ li-
ability act in 1838. Employers should be responsible for their
employee’s injuries or death regardless of their faults under the
employers’ liability act. In 1884, Germany enacted a compulso-
ry system of accident insurance, which is the first workers’ com-
pensation act in the world (1). Workers’ compensation insur-
ance was adapted in many countries for protection of workers
from occupational injuries and it became the first social securi-
ty system in most of the countries (2, 3).
The development of IACI
In case of Korea, in 1953 the Labor Standard Act (LSA) stated the
employer’s duty to compensate for the employee’s injury and
illness as an obligation. In 1963, by using the framework of social
insurance on industrial injuries, Industrial Accident Compen-
sation Insurance (IACI) Act was established (4).
IACI has a history of about 50 yr, and is the oldest social in-
surance system among four other social insurance systems in
Korea. However, compared to other European countries where
industrialization happened earlier, Korean IACI has a rather short
history. Though IACI Act had a lot of difficulties during the pro-
cess of early establishment and its actual application, after more
than 20 times of revision improvements in benefits, contents
and claim systems have been made. Therefore, it became the
protector of injured workers and their families, and at the same
time became the system which could cope with both financial
burden of employers and their responsibilities.
In 1964, when IACI was first established, it was only applied
for workers working in the mining and manufacturing indus-
tries of more than 500 fulltime workers. The compensations for
the rest of the companies were carried out according to Labor
Standard Act. From then, coverage of IACI continuously expand-
ed and on July 1, 2000 it was applied to all companies where one
or more workers are employed. As a result, 13,880,000 workers
from 1,560,000 companies are now receiving benefits of IACI
(Fig. 1) (5).
Coverage according to business types expanded from busi-
nesses where LSA is applied, to all businesses or companies in
1989, and from 2001, to public business conducted by central
or local government. Moreover, in 2008, rules for independent
contractors were established (6).
Expansion to cover all types of business scales and employ-
ment status indicates qualitative improvements. Realization of
benefit level was achieved and aspects of social security were
emphasized by pension type payment of disability benefits and
funeral expenses. Currently, political efforts are being made to
expand coverage of medical care benefits, to reduce the portion
of uninsured benefits, and to accomplish workers return to work.
However, due to insufficient administrative force there are still

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many blind spots. There are also criticisms about IACI that it is
executed according to the rule of causation, thus betraying the
fundamental rule of social security (7). At the same time, nurs-
ing benefit prices and medical care duration for industrial acci-
dent victims were pointed out as other problems, since they are
much higher and longer than that of other patient groups (8).
Contents of 2008 revised version of workers’ compensation
insurance and its meanings
Workers’ compensation achieved significant improvements in
contents, but still there are needs for quality improvements.
Quality improvement is especially required to accomplish fair-
ness in work related disease approval process, prolonged of du-
ration of medical care, and absence of proper rehabilitation pro-
grams. The blind spots of IACI such as independent contractors
were pointed out as one of problems. In order to solve these var-
ious problems, Committee of Workers’ Compensation Insurance
Development was organized in Tripartite Commission in 2006.
In July 1st 2008, a revised version of IACI Act by this committee
was enacted (9). The 2008 revised version of IACI Act contains
following subjects (10).
First, to clarify work related disease approval standards, spe-
cifics were indicated in the enforcement ordinance of IACI act.
At the same time Occupational Disease Award Commission
consisted of various specialists from Regional Headquarters of
Korean Workers’ Compensation and Welfare Service (COMWEL)
was established to enhance fairness and professionalism, and
was ordered to evaluate work related disease.
Second, rehabilitation benefit was defined as one of the med-
ical care benefits, and specialized nursing service was provided
through reasonable nursing standards. In addition, to prevent
delays in claims, claims were made to be requested not only by
workers but also by medical facilities. To prevent increased bur-
den of workers medical fees before the approval, the National
Health Insurance was made to be applied in advance.
Third, all tertiary hospitals were legally designated as an insti-
tute to apply IACI for the quality improvement in medical care.
Individual treatment plan was made to be submitted for exten-
sion of treatment periods.
Fourth, in case of insurance benefits, fluctuation of wages in-
cluding the discrepancies between the scales of business and
employment status was considered. For patients older than 60,
variability of consumer price was considered. The maximum
and minimum compensation amounts were set to 1.8 times and
1/2 of the average wage of the whole workers, respectively.
Fifth, to motivate workers’ early return to work, partial tem-
porary disability benefits were introduced. If returning to work
is proven not to aggravate the disease condition, and if the re-
turned workers’ working hours and tasks are limited to certain
degree, these benefits could be rewarded fully.
Other than these, the level of temporary disability benefits and
injury-disease compensation annuity for low-income workers,
and workers aged ≥ 65 yr old were raised, and disability approv-
al and classification system were also rationalized. The whole
prices of compensation were made to be given to foreign work-
ers at once, in case they’re leaving Korea. IACI Eligibility Award
Commission was established to enhance the specialty and fair-
ness in processing the work related disease claims, and mem-
bers recommended by workers’ union or employers’ organiza-
tion among committee were increased to up to 2/5 of the num-
ber limit.
IACI was applied to jobs formerly considered blind spots of
the system, like insurance salesmen, drivers of a ready mixed
concrete truck, study paper instructors, golf caddies, and to ac-
cidents happening from self-supporting public work programs,
which are conducted by recipients according to Nation Mini-
mum Livelihood Security Law. In the concept of sharing of risks
as part of a social security system, the maximum level of the pre-
mium rate and annual variability of IACI was adjusted to the
optimal level and the collection process of the insurance fees
was rationalized.
Above amendments could be valued highly since they con-
? ’90? ’95? ’96? ’97? ’98? ’99? ’00? ’01? ’02? ’03? ’04? ’05? ’06? ’07? ’08? ’09
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1,800
1,600
1,400
1,200
1,000
?800
600
400
200
0
Worker
Workplace
Fig. 1. Number of insured workplaces and work-
ers by year.
(unit,?1,000)

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tain significant improvements in IACI system achieved by mu-
tual agreements between labor, management and government.
By these improvements, IACI now has a new foundation of a
social agreement. Another characteristic of current improve-
ment is that it concerns about disadvantaged class of workers
and equity of paying benefits as a concept of the social security
program (11).
This also can be valued highly, since IACI cannot be consid-
ered separately from population structure, social economy, and
labor market change. Despite changes of economic structure
and improvements of technology, work-related accident rates
in Korea are not decreasing as expected, but on the contrary new
risk factors of accidents are emerging (12). In this aspect, labor
union asserts that fundamental goal of improvement of 2008
revisions is to prevent further increase of benefits due to prolon-
gation of individual treatment durations which will lead to finan-
cial crisis in the insurance fund, thus decreasing function of the
social security system (13). Criticism is especially concentrated
about the Occupational Disease Award Commission because
of improper involvements of non-specialists in the committee,
insufficient judging time, and absence of processes of hearing
from the victims directly (14).
As shown above, various opinions are being submitted ac-
cording to one’s standpoints. To this day there had been a lot of
positive changes in the Korean workers’ compensation system,
and a lot of positive outcomes followed. However, there are still
numerous long term and short term issues to be solved in order
for workers’ compensation system can properly act as a social
safety net in Korea. From now on, let’s go in to details about the
current problems that Korean workers’ compensation system is
facing.
CURRENT ISSUES
Issues in approval of occupational diseases
There are 38 occupational diseases in the Presidential Decree of
Labor Standard Act and 23 of them have detailed diagnostic cri-
teria in the Presidential Decree of IACI Act (15, 16). Diseases con-
sidered with importance in Korea are pneumoconiosis, noise
induced hearing loss, infectious disease and so on, which con-
sists more than 90% of all occupatonal disease. As a result of
work environment improvement and serial occupational dis-
ease prevention projects, occurrence rates of occupational dis-
ease has been decreased for the past 5 yr (Table 1) (17), but since
standards of work related disease approval process in cases of
cerebro-cardiovascular and musculoskeletal disease has been
changed in the 2008 revised version of IACI Act, we should view
this phenomenon from a rather different view.
Before 2008, cerebro-cardiovascular disease (CVD) was con-
sidered work related if fulfilled following conditions: 1) sudden
change in work environment or obvious stress factor, 2) increased
workload, 3) brain hemorrhage happened during work which
has no obvious evidence that it is not work related (18). In the
past, stress factors or relation to work were not considered with
importance, and approval was given if the accident happened
during work. This led to abnormally high approval rates of work
related cerebro-cardiovascular disease. As a result, there is a
significant discrepancy in approval rates between work related
brain infarct, acute myocardial infarction (25%), and work related
cerebro-cardiovascular disease (WR-CVD) (70%) (Table 2) (19).
This significant discrepancy in approval rates between dis-
eases connotes waste of workers’ compensation fund and prin-
ciple of equity between workers since high disapproval rates
were observed in workers with even worse conditions. In order
Table 1. Occupational and work-related diseases by year Unit: number
Year Total
Occupational DiseaseWork-related Disease
Subtotal PneuNIHL MetalSol Chem OtherSubtotalCVD BackMSDOther
2005
2006
2007
2008
2009
7,495
10,235
11,472
9,734
8,721
2,524
2,174
2,098
1,653
1,746
1,994
1,620
1,422
1,145
1,003
302
272
237
220
205
10
8
6
11
3
19
16
25
11
7
44
64
153
68
61
155
194
255
198
467
4,971
8,061
9,374
8,081
6,975
1,834
1,607
1,493
1,207
639
975
4,618
6,333
5,232
4,879
1,926
1,615
1,390
1,471
1,343
236
221
158
171
114
Pneu, pneumoconiosis; NIHL, noise induced hearing loss; Sol, solvents; Chem, chemicals; CVD, cerebro-cardiovascular diseases; Back, low back pain; MSD, musculoskeletal
diseases.
Table 2. Approval rate of WR-CVDs by year
CVDs
2005 2006 2007
ClaimsApproved
Approval rate
(%)
ClaimsApproved
Approval rate
(%)
Claims Approved
Approval rate
(%)
MI
SH
CH
CI
485
340
1,331
1,047
201
241
985
302
41.4
70.9
74.0
28.8
508
458
1,071
1,003
159
311
752
161
31.3
67.9
70.2
16.1
429
428
981
921
120
288
679
176
28.0
67.3
69.2
19.1
MI, myocardial infarction; SH, subarachnoid hemorrhage; CH, cerebral hemorrhage; CI, cerebral infarction.

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Table 3. Approval rate of cerebro-cardiovascular disease and musculoskeletal disease by year (2007-2010)
Disease
2007200820092010
Claims Approved
Approval
rate (%)
Claims Approved
Approval
rate (%)
ClaimsApproved
Approval
rate (%)
Claims Approved
Approval
rate (%)
CVD
MSD
Total
3,236
3,485
6,721
1,302
1,928
3,230
40.2
55.3
48.1
3,103
3,885
6,988
998
2,235
3,233
32.2
57.5
46.3
2,909
5,853
8,762
454
3,143
3,597
15.6
53.7
41.1
2,780
6,163
8,943
401
2,942
3,343
14.4
47.7
37.4
to solve this problem, in the 2008 revision of IACI, a clause stat-
ing that all CVD was work-related if it happened during work was
removed. Also to clarify the stress factors and overwork, follow-
ing changes have been added to the standard: 1) sudden stress
factors or work environment change happened within 24 hr-
periods before the accident, 2) > 30% increase of workload be-
fore 1 week period of accident, 3) > 3 months prolonged period
of overwork. Since there is no specification concerning about
chronic overwork there was tendency to evaluate overwork too
conservatively. This tendency became an issue because it led to
continued decrease of approval rates of WR-CVD since 2000
which can be a sign of non-objectivity. As a result, after the 2008
revision, WR-CVD approval rate dropped to an unexpected lev-
el, thus raising questions on the role of workers’ compensation
as a social security system from the labor associations and sev-
eral academic societies (Table 3) (20).
At the same time, in case of WR-MSD, previously approved
degenerative disease was not included in the work related dis-
ease list (18), but since most of the WR-MSD is due to chronic
overwork which inevitably accompanies degenerative changes,
many workers with WR-MSD took disadvantages. On the revised
version of approval standards, this clause was deleted, thus even
if there are degenerated lesions, WR-MSD could be actually ap-
proved according to the actual workload, but just like the approv-
al rate of the CVD, WR-MSD approval rate also showed contin-
uous decrease even after the revision (Table 3) (20).
Major reasons of decrease of approval rates in WR-CVD or
MSD are because the judgment process is based on the com-
prehensive concept rather than specific standards, and system-
atic problems including Occupational Disease Award Commis-
sion (20). Currently, diverse efforts are being made to solve these
systematic problems.
Quality of workers’ compensation medical care
General medical care and workers’ compensation medical care
shares the aspect of medical care but, in the aspect of quality as-
suring process there are various differences. The biggest differ-
ence between these two is that the goal of workers’ compensa-
tion medical care is injured workers’ return to work. Other than
this, workers’ compensation medical care specifically concerns
about the long term job retention, productivity, employer satis-
faction, disability cost, and economic impact on the patients
and the patients’ family (21). So far, studies concerning quality
of workers’ compensation medical care in Korea are quite rare
but, recently many discussions concerning about length of med-
ical care of occupationally injured patients and their return to
work are being made.
Korea’s occupationally injured patients treatment periods are
known to be longer than that of the other group of patients but
this is debatable. First, the treatment periods of occupationally
injured patients can be measured exactly by checking the WCI
request data, but in case of health insurance patients, outpatient
care duration cannot be measured precisely thus making the
comparison between these two groups quite inadequate. Sec-
ond, there is a difference in severity of injury between occupa-
tionally injured patients and other groups. Health insurance pa-
tients tend to sustain simple injuries, in contrast occupationally
injured patients tend to sustain multiple injuries, thus again
making simple comparison between these two meaningless.
However, occupationally injured patients’ treatment duration is
longer due to their longer admission days.
Won et al. (8) reported that according to the number of hos-
pitals patients visited during care, admission duration and out-
patient care duration of simple lumbar sprain cases showed 3.7
times and 2.4 times difference, respectively (Table 4). These pa-
tients also showed difference in admission and outpatient care
period according to the types and characteristics of the medical
facility. This is to say, patients who visited university hospital
showed relatively short admission duration and longer outpa-
tient care period, but primary clinic visitors showed longer ad-
mission duration and shorter outpatient period (Table 4) (8).
This phenomenon states that medical care period for occupa-
tionally injured patients is not calculated properly.
Physical therapy is especially important and also frequently
prescribed in occupationally injured patients, since WR-MSD is
common among workers. In case of physical therapy for rotator
cuff tears, thermotherapy and exercise therapy were prescribed
in most of the patients but for lower grade facility patients, ten-
Table 4. Length of care for lumbar sprain patients by types of hospital
Types of hospital
Admission (days)Ambulation (days)
N mean ± S.DNmean ± S.D
University hospital
General hospital
Hospital
Clinic
39
855
1,843
2,729
18.0 ± 15.9
28.0 ± 50.4
25.1 ± 25.9
34.0 ± 75.6
93
1,161
2,678
4,067
76.3 ± 91.1
58.6 ± 61.4
62.3 ± 48.8
59.1 ± 47.3

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dency of lower prescription rate of exercise therapy and higher
prescription rate of electric therapy were shown (Table 5) (8).
This is thought to be related to difference between medical facil-
ities’ treatment options and various quality of occupational med-
icine. Therefore, COMWEL should pay great attention on the
quality control of occupational medicine centers.

Issue of return to work
Final goal of workers’ compensation is workers’ return to work
(RTW). Korean workers with short employment duration, long
admission period, female gender, old age, and who work in small
size companies had more difficulties in coming back to work (22,
23). In RTW, social factors played a great role, but at the same
time medical factors should not be overlooked.
In addition to medical reasons, injured workers who had lon-
ger period of sick leave tend to show low rate of RTW due to ad-
aptation to work. This is to say that, shortened sick leave might
help with workers RTW. Thus, we should know that relatively
long period of sick leave of Korean workers’ might have a bad
influence on the injured workers’ actual return to work.
Another important factor that affects workers’ RTW is the pres-
ence of job rehabilitation service. Job rehabilitation service could
be defined as a job-seeking service or a vocational training in a
narrow perspective, but the true identity of job rehabilitation can
be defined as a comprehensive course of treatment, rehabilita-
tion, vocational therapy, job seeking and reemployment.
Rate of RTW among Korean workers have increased from 40%
in 2000 to 57.2% in 2009, and compared to the other developed
countries, this is not a bad figure (Table 6). However, rate of RTW
for disabled workers is still low, and rate of return to original work-
place is also low. In addition to this, long term job retention rate
is low compared to that of the other developed countries.
The concepts of promotion of rehabilitation and return to so-
ciety of workers were specified in the provision of the workers’
compensation insurance by the amendment in 2000. The 5-yr
project (from 2001 to 2005) on rehabilitation was planned and
implemented with the purpose of consolidation of the system
regarding not only medical rehabilitation but also vocational
and social rehabilitation, and return to work.
Though rehabilitation benefit is added to 2008 revision of WCI,
medical rehabilitation and vocational rehabilitation are still be-
ing considered separately. This is to say that vocational and med-
ical rehabilitation is not ideally connected to each other since the
vocational rehabilitation benefits can only be requested after
the termination of medical care benefits. Therefore, attention of
doctors should be paid not only on the medical care but also on
the return to work of occupationally injured patients.
Case management is a collaborative process of whole RTW
period to promote quality cost-effective outcomes in workers’
compensation medical care. It has been introduced to Korea
several years ago as a name of ‘Visiting Service’ or ‘Individual-
ized Service’ . However, it was insufficient to achieve the goal be-
cause of lack of qualified case managers and appropriate man-
ual. In this context, COMWEL has trained case managers since
2010. These trained case managers will be able to do important
role in workers’ compensation medical care or RTW.
Financial aspects of workers’ compensation
Workers’ compensation premium is calculated by multiplica-
tion of the total sum of wages of a business and an insurance
premium rate applied to other similar kinds of business. This is
to say that the total sum of premium that owners should pay is
decided by the total sum of wages in the company and the insur-
ance premium rate according to the business types. Workers’
compensation premium rate is applied according to the 61 job
classifications established in 2009 and 2010. The average premi-
um rate applied for computing business in 2011 was 1.8%. Coal
mining business showed the highest rate of 35.4%, and finance
Table 6. Annual return-to-work (RTW) rates of injured workers in Korea Unit: number (%)
Year
No. of injured
workers
Types of return-to-work
Not returned Unable to survey
Total Previous worksite Another worksiteOwn business
2009
2008
2007
2006
2005
35,569
37,178
36,553
38,872
37,119
20,334 (57.2)
19,950 (53.7)
18,220 (49.8)
17,681 (45.5)
15,680 (42.2)
12,511 (35.2)
12,962 (34.9)
12,216 (33.4)
11,794 (30.3)
10,144 (27.3)
6,684 (18.8)
6,031 (16.2)
5,223 (14.3)
5,472 (14.1)
4,958 (13.4)
1,139 (3.2)
957 (2.6)
781 (2.1)
415 (1.1)
578 (1.6)
12,330 (34.7)
13,905 (37.4)
13,459 (36.8)
15,095 (38.8)
13,225 (35.6)
2,905 (8.2)
3,323 (8.9)
4,874 (13.3)
6,096 (15.7)
8,214 (22.1)
Table 5. Claims of physical therapy by types of hospital Unit: number (%)
Type of care Types of hospital
Total physical
therapy
Thermotherapy TENS ICTExercise therapy
AdmissionGeneral hospital
Hospital
Clinic
General hospital
Hospital
Clinic
8
9
14
14
23
35
6 (75.0)
6 (66.7)
13 (92.9)
13 (92.9)
22 (95.7)
35 (100.0)
2 (25.0)
3 (33.3)
7 (50.0)
8 (57.1)
11 (47.8)
23 (65.7)
2 (25.0)
3 (33.3)
8 (57.1)
4 (28.6)
13 (56.5)
20 (57.1)
7 (87.5)
6 (66.7)
9 (64.3)
13 (92.9)
17 (73.9)
26 (74.3)
Ambulation