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[Asia Economy Reporter Oh Hyung-gil] The Financial Supervisory Service (FSS) has recommended that major non-life insurance companies correct the premium rates for the driver insurance victim injury treatment special contract.

According to the insurance industry on the 26th, the FSS recently advised six non-life insurers, including DB Insurance, Samsung Fire & Marine Insurance, and Hyundai Marine & Fire Insurance, to correct the premium rates for the driver insurance victim injury treatment special contract and to implement the changes starting next month.

According to the inspection results recently disclosed by the Korea Insurance Development Institute, the premium rates for the victim injury treatment special contract of six companies including DB Insurance were calculated excessively high due to an overly applied risk rate.

Although the risk covered by the special contract is limited to accidents defined under the Act on Special Cases Concerning the Settlement of Traffic Accidents as "accidents where the perpetrator was indicted or had prosecution suspended by the prosecutor," insurers used "traffic accident victim statistics" as the base statistics, which include not only indicted or prosecution-suspended accidents but also traffic accidents processed as "no prosecution against the perpetrator," resulting in a much higher applied risk rate for the risk of insurance payment.

The Insurance Business Supervision Regulations allow a risk rate increase of up to 30% when calculating premium rates, and additional increases only when covering new types of risks; however, a risk rate increase of over 50% was applied to the victim injury treatment special contract.

The FSS judged that since the victim injury treatment coverage cannot be considered as covering a new type of risk, applying a risk rate increase of over 50% violates the Insurance Business Supervision Regulations.

Accordingly, the FSS ordered the correction of the premium rate calculation method and implementation starting next month. However, even if the product structure is reorganized, it will not apply to existing policyholders.