[Asia Economy Reporter Noh Kyung-jo] The government has launched a service contract to obtain approval for the establishment of a delivery service mutual aid association. The plan is to complete the service contract by April if possible and obtain approval in the second half of the year.
According to the Public Procurement Service's Nara Market on the 19th, the Ministry of Land, Infrastructure and Transport recently announced a bid for the "Delivery Service Mutual Aid Association Establishment Approval Review Service Contract." This service contract, which will be conducted over three months from the contract date, aims to have a specialized institution review the business plan and other documents before operating the mutual aid association.
The main tasks of the service contract include ▲analysis of the current status of the two-wheeled and automobile mutual aid industries ▲review of the delivery service mutual aid association's business plan and income and expenditure statement ▲review of approval cases of other mutual aid associations and preparation for future operations. Detailed review items include confirming and securing the scale of initial capital procurement, appropriateness of the planned mutual aid products, and the adequacy of the calculation of rates, contributions, and reserves.
The delivery industry is a representative platform industry that has rapidly grown since COVID-19. Online food service sales increased more than fivefold from 5.2 trillion KRW in 2018 to 25.7 trillion KRW in 2021. However, industrial accidents such as fatal accidents also increased, exposing vulnerabilities such as poor working conditions. The number of industrial accident deaths among delivery workers rose from 7 to 18 during the same period.
The problem is that as of the end of 2021, the average insurance premium for paid transportation insurance was 2.37 million KRW per year, which is 11 times higher than household insurance premiums, resulting in a low insurance subscription rate among delivery workers. The Ministry of Land, Infrastructure and Transport explained that when estimating the total number of delivery workers at 200,000, the number of insured vehicles was 64,000, resulting in a subscription rate of only 32%. It was also noted that insurance companies are reluctant to handle paid transportation insurance due to high loss ratios.
In response, nine major parcel delivery agencies including Woowa Brothers, Coupang Eats, Barogo, and Mesh Korea have promoted the establishment of a delivery service mutual aid association and held a founding general meeting in October last year. The goal is to alleviate the insurance premium burden and increase the subscription rate for delivery workers. However, formal approval has not yet been granted. Although the Ministry of Land, Infrastructure and Transport planned to support the capital contribution with a budget, it was blocked at the National Assembly, and the nine companies decided to differentiate capital contributions based on sales and asset status, but negotiations are still ongoing, according to a company official.
A Ministry of Land, Infrastructure and Transport official said, "We will naturally proceed in the direction of approval," adding, "We issued the service contract because professional review and supplementation are necessary. We will ensure that the delivery service mutual aid association operates soundly."
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