15 Million Won to 200 Million Won... Drunk Driving Penalties Raised, Accidents Drop Sharply

Significant Decrease in Insurance Payouts Following Strengthened Accountability

Since the responsibility for drivers involved in drunk driving accidents was strengthened to require them to pay up to 200 million KRW in accident burden fees, the insurance payouts by insurers have been found to have nearly halved.

According to data submitted by 12 non-life insurance companies through the Financial Supervisory Service, provided by Choi Seung-jae, a member of the National Assembly's Political Affairs Committee from the People Power Party, the amount paid for automobile insurance accident burden fees in April this year was 3.9 billion KRW for bodily injury and 4.4 billion KRW for property damage, which is about half compared to 8.3 billion KRW for bodily injury and 8.4 billion KRW for property damage in August last year.

This sharp decline occurred after the accident burden fees for serious legal violations such as drunk driving, hit-and-run, and unlicensed driving were significantly increased on July 28 last year.

Accident burden fees are a system designed to raise awareness of serious legal violations and prevent accidents by requiring the person who caused the accident to bear part of the insurance payout.

Previously, the person who caused the accident was responsible for a deductible of up to 10 million KRW for bodily injury and 5 million KRW for property damage. However, since last July, the deductible was changed to require the driver to bear up to the full compulsory insurance compensation limit: 150 million KRW per person for death, 30 million KRW for injury, and up to 20 million KRW per accident for property damage. This increased the maximum deductible from just 15 million KRW combined for bodily injury and property damage to up to 2 billion KRW, strengthening responsibility by more than 13 times.

During the same period, the number of accident burden fee payments also decreased. The number of bodily injury accident payments dropped from 1,618 cases in August last year to 1,101 cases in April this year, and property damage accident payments decreased from 1,990 cases to 1,499 cases over the same period.

The proportion of accident burden fees due to drunk driving in the total bodily injury insurance payouts was 4% in 2018 but steadily declined to the 2% range, and after the strengthening of accident burden fee responsibility for drunk driving in April this year, it further dropped to 1.3%.

Payments for accident burden fees related to unlicensed driving and hit-and-run accidents also significantly decreased. The number of bodily injury and property damage payments for unlicensed driving accidents fell from 968 cases in August last year to 714 cases in April this year, with amounts decreasing from 2.9 billion KRW to 1.3 billion KRW. During the same period, hit-and-run accident payments dropped from 326 cases to 170 cases, and the amounts decreased from 1.4 billion KRW to 460 million KRW.

The recovery rate of accident burden fees has decreased to half in five years

However, the low recovery rate of accident burden fees has been pointed out as a problem. In the case of insurance payouts to victims, the insurer first pays the victim and then claims the amount corresponding to the accident burden fee from the driver (insured) through subrogation. This subrogation recovery rate has continuously declined, dropping to half over five years.

Specifically, the recovery rate for bodily injury accident burden fees imposed on drunk driving drivers was 90.8% in 2018 but steadily decreased to 38.9% in April this year. The recovery rate for property damage accident burden fees was also 93.9% in 2018 but fell to 43.4% in April this year.

It is presumed that those who caused accidents are either unable to pay or are not paying the increased burden fees.

Regarding this, Assemblyman Choi Seung-jae stated, "Financial sanctions on legal violations such as drunk driving, hit-and-run, and unlicensed driving appear to have had a significant effect," adding, "We plan to further strengthen accident burden fees to eradicate drunk driving and improve the recovery rate, thereby encouraging a reduction in insurance premiums."

According to data submitted by the National Police Agency to Assemblyman Choi Seung-jae's office, drunk driving accidents decreased from 19,381 cases in 2018 to 15,059 cases last year, and the proportion of drunk driving accidents in total accidents also declined from 8.9% to 7.7% during the same period.