Delivery Service Mutual Aid Association Launches Insurance for Paid Transportation
16-32% Cheaper Compared to Existing Insurance
Available for Subscription Regardless of Accident History or Age
"While working as a delivery rider, I thought insurance was a waste of money and didn’t sign up, but I had an accident. After that, I inquired about insurance, but was rejected due to my accident history. Now, even with an accident history, I can sign up for insurance at a more affordable rate, so there’s no reason not to get insured." (32-year-old delivery worker A)
The entry barrier for 'rider insurance' is lowering, and premiums are becoming 16% to 32% cheaper than before. Delivery workers with accident histories can now also get insured, and monthly insurance subscriptions will be available.
Delivery Service Mutual Aid Association Launches Paid Transport Insurance... 16% to 32% Cheaper Than Market Rates
On the 25th, the Ministry of Land, Infrastructure and Transport announced that the 'Delivery Service Mutual Aid Association' will launch paid transport insurance under these conditions. Paid transport insurance is a type of motorcycle insurance for delivery workers who receive fees or allowances per delivery, such as quick services or delivery agencies. Previously, this insurance product was sold by general insurance companies, but now the mutual aid association has developed its own product.
The government and the mutual aid association plan to raise the insurance subscription rate from about 40% to 80% within five years. The mutual aid association is a nonprofit corporation jointly established in May last year by eight certified small parcel delivery service operators, including Woowa Brothers and Barogo.
Delivery workers can subscribe to this insurance regardless of how many accidents they have had. A Ministry of Land, Infrastructure and Transport official said, "Until now, general insurance companies rejected delivery workers with accident histories when they tried to subscribe to paid transport insurance. To support riders who could not get insured, the mutual aid association’s insurance allows subscription without considering accident history or age."
The premiums are also 16% to 32% cheaper than those of existing general insurance companies. The hourly rate for paid transport insurance will decrease from 853 KRW to 714 KRW. Annual premiums will be launched at a reduced price, from 1.78 million KRW down to a maximum of 1.2 million KRW. Monthly insurance, introduced for the first time, does not yet have finalized premium rates.
Delivery workers can subscribe to this hourly insurance starting from the 25th. Annual and monthly insurance will be launched at the end of August. A Ministry official said, "If we release all products at once, system overload issues may occur, and since monthly premium rates and other details are still under discussion, we first released the hourly insurance."
On the 3rd, when a heavy snow warning was issued throughout Seoul, a delivery rider was passing through the streets of Gangseo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@
This insurance, like others, offers cheaper premiums when paid in bulk. Calculating hourly insurance at 8 hours per day, 5 days per week, the annual premium is about 1.37 million KRW. This is 170,000 KRW more expensive than the annual insurance premium, which can go down to 1.2 million KRW. Monthly premiums will be set between the hourly and annual rates, but specific details will be decided by the end of August.
Monthly and Annual Insurance Offer Premium Reductions for No Accidents... Hourly Insurance Does Not Provide Discount Benefits
Monthly and annual insurance premiums are immediately reduced if the subscriber consistently pays premiums and has no accidents. The Ministry plans to encourage safe driving through this. Specific premium reduction rates will also be finalized by the end of August.
However, hourly insurance does not offer premium reductions. A Ministry official explained, "Hourly insurance premiums are not determined based on individual subscribers like annual or monthly insurance, so no premium discounts for no accidents can be provided. Hourly insurance premiums are basically calculated based on the number of accidents of the delivery agency, not the individual rider, and then fees are charged to riders based on the number of subscribers and hours insured."
Meanwhile, the reason the Delivery Service Mutual Aid Association’s paid transport insurance is cheaper than market insurance is because the association is a nonprofit corporation. Insurance companies must generate profits after deducting operating and labor costs from premiums collected. However, the mutual aid association is a nonprofit and does not aim to make profits. Therefore, premiums are set only to cover operating and labor costs, resulting in lower prices.
Um Jeong-hee, Director of the Transportation and Logistics Office at the Ministry of Land, Infrastructure and Transport, said, "This newly launched mutual aid product will greatly help reduce the insurance subscription burden for delivery workers. The government will continue to pursue policies to strengthen the social safety net for workers."
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