Expectations for Pet Insurance Activation Measures from Authorities
Active Business Expansion in the Industry
The number of pet insurance contracts surged in the first half of this year, pushing the subscription rate past 1%.
According to the non-life insurance industry on the 20th, the total number of pet insurance contracts sold by 11 insurers in the first half of this year reached 87,911, a 22.3% increase compared to the same period last year.
As of the first half, the gross written premium amounted to 21 billion KRW, already approaching the total gross written premium of 21.3 billion KRW for the entire year of 2021. Compared to last year's 28.8 billion KRW, it accounts for 69.8%.
Considering that the number of companion animals in Korea was recorded at 7.99 million last year according to the Ministry of Agriculture, Food and Rural Affairs' public awareness survey, the subscription rate is estimated at 1.1%. This is nearly three times the 0.4% rate in 2021.
Nevertheless, the relatively low subscription rate is attributed to a lack of standardization and institutionalization. There is an insufficient institutional foundation, such as the absence of standardized animal treatment fees and treatment codes, and a lack of data related to treatment costs makes it difficult to calculate premiums and manage loss ratios.
In response, the Financial Services Commission plans to soon announce measures to revitalize pet insurance. These are expected to include improvements to infrastructure related to pet registration and treatment items, and the establishment of cooperative systems based on partnerships between the veterinary and insurance industries.
The industry is also making efforts to expand pet insurance in step with these initiatives. A representative example is KB Insurance lowering the criteria in its "KB Geumjjokgateun Pet Insurance" to allow pets with chronic diseases or serious past illnesses to enroll. Previously, pets with medical histories were restricted from subscribing to pet insurance, but by disclosing past medical history, the insurer introduced a "partial exclusion underwriting" that excludes coverage only for parts related to the disease, thereby lowering the entry barrier. Partial exclusion is a method that allows insurance enrollment under conditions that exclude coverage for specific body parts or diseases for a certain period.
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