Burden Sharing Ratio, 78.5% from National Taxes · 0% from NongHyup
"NongHyup's Share Should Increase to Ease Farmers' Burden"
Claims have been raised that the "Comprehensive Agricultural Machinery Insurance," which covers damages caused by accidents during the operation of agricultural machinery or farm work, is turning into a profit-making tool for the NongHyup (National Agricultural Cooperative Federation). This insurance, considered essential for safety assurance, has a higher contribution rate from farmers compared to other insurances, and its average operating profit margin is also high. Although it is an insurance for farmers, it is criticized as essentially an "insurance that fattens NongHyup."
On the 18th, Moon Geum-ju, a member of the Democratic Party of Korea (representing Goheung, Boseong, Jangheung, and Gangjin), analyzed the "Operating Profit Status of Comprehensive Agricultural Machinery Insurance" submitted by NongHyup Property & Casualty Insurance. The analysis revealed that over the past four years, the operating profit from comprehensive agricultural machinery insurance reached 40 billion KRW, with an average operating profit margin of 14.6%. The annual operating profit margins were 10.0% in 2020, 21.4% in 2021, 17.4% in 2022, and 9.1% in 2023.
The comprehensive agricultural machinery insurance covers personal and property damages in case of accidents during the operation of agricultural machinery or farm work. The eligible machinery types for subsidized enrollment include 12 types such as tillers, tractors, combines, and riding rice transplanters. Anyone aged 19 or older registered as an agricultural management entity, including agricultural corporations, can enroll, making it one of the essential insurances among farmers.
When comparing comprehensive agricultural machinery insurance with NongHyup Property & Casualty Insurance’s overall insurance, the average operating profit margin of agricultural machinery insurance is 4.8 times higher than the overall insurance average of 3%. Over the past four years, the overall operating profit margins of NongHyup Property & Casualty Insurance were 1.4% in 2020, 2.6% in 2021, 3.1% in 2022, and 4.8% in 2023.
The composition ratio of the comprehensive agricultural machinery insurance premium, which can be called NongHyup Property & Casualty Insurance’s "cash cow" product, is evaluated as a significant source of income for NongHyup. As of this year, the contribution rates for comprehensive agricultural machinery insurance were △national government 47.9%, △local governments 30.6%, △farmers 21.4%, and △NongHyup 0.1%. In other words, 78.5% of the funding comes from public taxes, making it essentially a public insurance. Meanwhile, NongHyup’s contribution rate is close to "0%," leading to criticism that NongHyup is focusing on business using public tax money as capital.
Even when looking at the contribution rates of the "Agricultural Workers’ Life Stability Insurance," which has a similar public insurance nature, NongHyup’s support rate is extremely low. The contribution rates for Agricultural Workers’ Life Stability Insurance are △national government 48.7%, △local governments 26.2%, △farmers 14.7%, and △NongHyup 10.4%, which helps reduce the burden on farmers.
Assembly member Moon stated, "Even if other products are overlooked, comprehensive agricultural machinery insurance should not become a means of making money," and added, "NongHyup’s contribution rate should be increased, and the burden on farmers should be lowered to ease their insurance premium costs."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
