Although much health services research has been conducted using national health insurance claims data in Korea, the validity of this method has not been ascertained. The objective of this study was to validate the use of claims data for health services research by comparing incidence rate of cancers found using insurance claims data against rates of the national cancer registry of Korea. An algorithm to estimate incidence rates using claims data was developed and applied. The claims data from 2005-2008 were acquired and the patients admitted to hospitals due to cancer in 2008 without admission to hospital from 2005-2007 by the same diagnosis code were regarded as incident cases. The acquired results were compared with the values from the National Cancer Registry of Korea. The incidence rate of all cancers found using claims data was 363.1 per 100,000 people, which is very similar to the 361.9 per 100,000 rate of the national cancer registry. Also the age-, gender- and disease-specific rates between the two data sources were similar. Therefore, national health insurance claims data may be a worthwhile resource for health services research if appropriate algorithms are applied, especially considering the cost effectiveness of this method.