Reduction in Car Insurance Premiums and Suspension of Real Loss Insurance During Military Service... Insurers Announce Win-Win Finance Plan

Starting Implementation from 1Q Next Year

The financial authorities have unveiled a win-win financial plan for the insurance sector. The plan includes measures to reduce automobile insurance premiums and suspend the payment of indemnity medical insurance premiums for those serving in the military. Additionally, they plan to adjust interest rates on insurance policy loans and encourage insurance enrollment for designated driver service workers.

On the 14th, the Financial Services Commission, together with the Financial Supervisory Service, prepared these priority win-win tasks and decided to implement them within the first quarter of next year. They also plan to continue necessary institutional improvements and identify additional productive tasks going forward.

First, the reduction rate for automobile insurance premiums will be quickly determined and announced. Specific adjustment levels for indemnity insurance premium increases will also be prepared and disclosed soon. Along with this, various institutional improvements will be pursued to reduce the insurance premium burden.

In the case of automobile insurance, if a driver’s driving history is interrupted (exceeding 3 years) and they re-enroll, they will inherit their previous discount grade, and the rental car driving period will also be reflected in the premium discount by changing the criteria. For indemnity medical insurance, the payment of premiums will be suspended during military service while maintaining the insurance coverage.

The method of calculating interest on insurance policy loans will also be revised. Insurance policy loans secured by insurance policy surrender values have been criticized for having low default and interest rate fluctuation risks, and mostly being for 'small amount and livelihood' purposes, yet having high interest rates. Accordingly, the insurance sector will adjust the additional interest rates on insurance policy loans. Furthermore, for policyholders facing difficulties such as unemployment, business closure, or serious illness, loan interest payments will be deferred. Deferred interest will be paid later or settled after the insurance payout (surrender value payment).

The blind spots in designated driver insurance enrollment will also be addressed. Previously, there was no premium adjustment system based on the number of accidents, so designated drivers with multiple accidents could not enroll. Now, a discount and surcharge system based on the number of accidents will be introduced to allow free enrollment. Along with this, the compensation limits and coverage of designated driver insurance will be expanded.

Additionally, when switching to insurance from the same company, the criteria for the waiting period (a period during which coverage is not provided for pre-existing conditions in insurance contracts) will be improved. If a certain period of the waiting period has passed in the existing insurance contract, this will be reflected in the new contract to shorten the waiting period compared to before.

A Financial Services Commission official stated, "The insurance sector will promptly implement the priority tasks announced this time in cooperation with the financial authorities, and plans to identify and announce new win-win tasks additionally."