Funeral Service Subscribers Near 6.5 Million... Increase Mainly Among Large Companies

Fair Trade Commission, Disclosure of Prepaid Funeral Service Companies Information for the First Half of the Year

A funeral service company in Gyeonggi-do holding a meeting. (Photo by Asia Economy DB)

[Asia Economy Reporter Moon Chae-seok] The number of funeral service companies has decreased, while the number of subscribers has increased. The market continues to be reorganized mainly around companies with relatively sound finances. For the first time in the second half of last year, the number of subscribers exceeded 6 million, and it was found to have approached 6.5 million in the first half of this year.

Source=Korea Fair Trade Commission

The Fair Trade Commission announced on the 8th that as of the first half of the year (end of March), the number of registered funeral service companies was 84, and the number of members was 6.36 million. Compared to 86 companies and 6.01 million members in the second half of last year, the number of companies decreased by 2.3% (2 companies), while the number of subscribers increased by 5.8% (350,000 people). In particular, the number of subscribers has steadily increased since it first exceeded 6 million in the second half of last year, after the Installment Transactions Act began to apply in 2010.

Source=Korea Fair Trade Commission

The number of companies has been steadily decreasing since 2012. When narrowed down since the first half of 2018, the decline is more pronounced. The number shrank from 154 in the first half of 2018, 146 in the second half of 2018, 92 in the first half of last year, 86 in the second half of last year, to 84 in the first half of this year. The decrease accelerated as companies that failed to comply with the capital requirements under the revised Installment Transactions Act at the beginning of last year either closed down or were absorbed/merged.

Source=Korea Fair Trade Commission

The total amount of advance payments received by funeral service companies was 5.8838 trillion KRW, an increase of 5.35% (298.9 billion KRW) compared to the second half of last year. Among the 84 companies, 50 are large companies with advance payments exceeding 10 billion KRW, and their advance payments accounted for 98.6% (5.7994 trillion KRW) of the total. The increase in advance payments means that the amount paid by new and retained subscribers exceeds the decrease in advance payments due to events and cancellations. The market structure, where advance payments mainly come from large companies, has become more solidified.

Funeral service companies preserve 50.4% of the advance payments, amounting to 2.9664 trillion KRW, through mutual aid associations, bank deposits, and payment guarantees. Forty companies use mutual aid associations, preserving 1.5291 trillion KRW. Thirty-four companies use bank deposits, preserving 362.9 billion KRW. Five companies have bank payment guarantees, preserving 398.8 billion KRW.

The Fair Trade Commission will disclose the legal violations of funeral service companies that have received corrective actions beyond recommendations for violating the Installment Transactions Act on the Fair Trade Commission website's "Prepaid Installment Transaction Business Information Disclosure" section on the 8th. From October last year to March this year, the Fair Trade Commission sanctioned 11 funeral service companies. Violations include 4 cases of prohibited acts by prepaid installment transaction businesses, 1 case related to consumer damage compensation insurance contracts, 1 case of failure to submit materials for information disclosure, 2 cases of obligations related to succession of status, and 2 other acts subject to fines.

Hong Jeong-seok, head of the Installment Transactions Division at the Fair Trade Commission, said, "Funeral service companies have voluntarily participated in the 'Naesangjo Geudaero' service to enhance consumer trust," adding, "In addition, it is necessary to strengthen financial soundness and make efforts to prevent consumer damage in order to restore consumer trust."