Driver insurance will be reduced from July… Up to 20% extra deductible

Non-life insurance industry prepares measures to prevent moral hazard and insurance fraud

On the morning of January 14th, a panoramic view of the road to work on the Sungeori Sam Intersection in Tanbang-dong, Seo-gu, Daejeon. [사진 연합뉴스]

[이코노미스트 박지윤 기자] From July at the earliest, the driver insurance is expected to be significantly reduced. While the guarantee is being reduced, the burden on consumers is expected to increase as the co-payment is raised up to 20%.

According to the insurance industry on the 30th, non-life insurance companies such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance will pay up to 20 percent of their own expenses. for driver insurance traffic accident treatment subsidies and attorney fees from July at the earliest.

With this measure, the financial burden on insurance consumers has increased due to less coverage than before. Driver insurance is optional insurance, unlike auto insurance, which all vehicle owners must subscribe to. Covers the insured’s injuries and legal expenses incurred in accidents while driving.

According to the publication of the General Insurance Association, the number of new driver insurance contracts last year was 4,928,692. Non-life insurers have stepped up sales promotion, believing that the size of the driver’s insurance market will grow further given the number of vehicles owned.

In response, financial authorities such as the Financial Services Commission and the Financial Supervisory Service are said to have asked the insurance industry to take steps to prevent excessive competition in driver insurance and moral hazard among some subscribers.

In the past, driver’s insurance only covered criminal settlements and the cost of hiring a lawyer in a set amount. However, criticism has been raised that a larger amount can be guaranteed in the case of duplicate subscriptions than the amount actually obtained in criminal settlements, causing moral hazard and insurance fraud.

At the time, the guaranteed maximum of the special contract guaranteeing a criminal settlement was ’30 million won on death’, but 15 years later, it has increased to a maximum of 200 million won.

It is analyzed that the fact that the penalty for drivers has been strengthened has also had an impact on the rapid increase in interest in driver insurance. As the Yoon Chang-ho Act and the Min-sik Act were enacted due to drunk driving and accidents in school zones, issues related to safe driving and pedestrians have risen rapidly, and driver insurance products that guarantee legal fees has become popular.

ⓒ The Economist ( Unauthorized reproduction and redistribution of ‘The Economist, Economic News for Tomorrow’ is prohibited


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