[Become an Insurance Insider] Do You Know About Certified Alternative Auto Parts?

Introduction of Special Terms for Use of Certified Quality Parts
Only 13 Cases Utilizing Certified Alternative Parts

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Lee Hae-chan, leader of the Democratic Party of Korea, is delivering a speech at the "Agreement Ceremony for the Activation of Alternative Automotive Certification Products" held at the National Assembly in Yeouido, Seoul on the 13th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Oh Hyung-gil] The 'Certified Alternative Parts' introduced by the government in 2015 to reduce the high cost of automobile parts are being ignored in the market. It was found that only 13 cases of certified alternative parts were used in automobile insurance accidents last year.

According to the Insurance Research Institute on the 17th, the government legalized the 'Alternative Parts Certification System' in 2015 to curb the increase in automobile parts costs due to the use of original equipment manufacturer (OEM) parts and to strengthen competitiveness by expanding sales of small and medium parts companies.

Certified alternative parts are alternative parts certified by private certification bodies among alternative parts according to Article 30-5, Paragraph 4 of the Automobile Management Act, and are almost identical to OEM parts in terms of performance.

The Financial Supervisory Service, the Korea Insurance Development Institute, and the insurance industry launched a special clause in 2018 that refunds 25% of the OEM part price to consumers who repair their vehicles using certified alternative parts when insured under own vehicle damage coverage.

However, since the introduction of the special clause for the use of quality-certified parts, only 13 cases have applied this special clause as of October 2020, all of which were imported cars.

Also, as of the end of November 2020, among a total of 1,233 certified alternative parts, only 10 exterior parts and 118 functional/consumable parts were certified alternative parts for domestic cars.

The reasons for the low utilization of certified alternative parts include low awareness, passive recommendations by repair shops, and the limitation of the special clause for quality-certified parts to accidents involving own vehicle damage with unilateral fault or single-vehicle accidents, restricting the applicable accident types.

Ki Seung-do, senior researcher at the Insurance Research Institute, suggested, "To reduce consumers' negative perception of the term 'alternative parts,' it should be changed to other terms such as 'quality-certified parts' or 'certified parts.' Also, the liability insurance clause should be revised so that parts costs are calculated according to the principle of actual expense compensation when repairing vehicle-to-vehicle collision accidents."

He added, "It is necessary to build an integrated computer network related to certified alternative parts to enable consumers to easily search and select certified alternative parts information. Establishing a computerized system that matches part information by vehicle identification number and electronic parts catalog (EPC) through the integrated network will improve consumers' convenience in searching and selecting quality-certified parts."