Rampant Delivery Motorcycles... "Is It Okay Not to Have Insurance?"

On the 2nd, amid growing concerns over the spread of COVID-19, motorcycles are parked near Dongdaemun Comprehensive Market in Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Oh Hyung-gil] As the use of delivery services increases, the number of motorcycle delivery workers is also rapidly growing, but insurance enrollment related to motorcycles remains low. Due to the conditions requiring deliveries to be made as quickly as possible, motorcycle drivers often ignore traffic signals, engage in weaving through traffic, and drive dangerously. Victims involved in accidents with uninsured motorcycles are unable to receive compensation, raising serious social issues.

Because of the high risk of accidents, insurance premiums for motorcycles and other two-wheeled vehicles exceed 1 million KRW, posing a significant burden. The government plans to introduce a deductible special clause for personal injury and property damage coverage in two-wheeled vehicle insurance in the second half of this year to reduce the insurance premium burden.

According to the insurance industry on the 21st, financial authorities plan to start developing a deductible special clause for personal injury and property damage in two-wheeled vehicle insurance through the General Insurance Association of Korea. Motorcycle drivers will be able to choose a deductible amount of 0 KRW, 300,000 KRW, or 500,000 KRW, and insurance premiums will be partially discounted accordingly.

When subscribing to the 500,000 KRW deductible special clause, it is expected that personal injury coverage 1 premiums can be reduced by about 12%, and property damage premiums by about 18%. Overall, the plan is to lower premiums by approximately 15%.

According to research by the Korea Insurance Research Institute, as of 2018, the number of registered two-wheeled vehicles was about 2.2 million, which is less than one-tenth of passenger cars (18.7 million), vans (840,000), or trucks (3.6 million). However, among the total 217,000 traffic accidents, two-wheeled vehicle accidents accounted for about 15,000 cases, or 6%, while the proportion of fatalities from two-wheeled vehicle traffic accidents exceeds 10% of all traffic accident fatalities. This indicates a higher likelihood of serious accidents compared to other vehicle types.

However, the number of insured two-wheeled vehicles is 960,000, which is less than half. Most of those insured have only subscribed to mandatory insurance. More than 50% remain uninsured.

The low insurance enrollment rate is attributed to expensive premiums. In particular, insurance premiums for two-wheeled vehicles used for paid transport delivery are relatively higher than those for other uses.

In 2018, the average annual insurance premium for two-wheeled vehicle insurance subscribers was about 194,000 KRW. For household and other uses, the average was 134,000 KRW; for non-paid (business owners purchasing motorcycles for delivery) transport delivery use, it was 395,000 KRW; whereas for paid (quick service or delivery service company subcontracted delivery) transport delivery and rental use, it reached as high as 1,183,000 KRW.

An insurance industry official said, "If insurance premiums for motorcycles and other two-wheeled vehicles such as delivery motorcycles decrease, it will serve as an incentive to encourage insurance enrollment," adding, "Although a deductible must be paid to lower premiums, this can also serve as a motivation for safer driving."