[Exclusive] Car Insurance 'Comparison & Recommendation Service 2.0' Launches on 27th... Big 4 Insurers' CM Rates Reflected by End of March 'Caution'

Financial Authorities Improve Service After Low Subscriber Numbers Since January Last Year
Platform Commission Rate Reduced from 3% to 1.5%
Concerns Remain Over Business Expense Transfer... Consumer Benefits Still Uncertain

The car insurance comparison and recommendation service, which was launched last January but underwent restructuring due to low subscriber numbers, will be upgraded to version 2.0 starting from the 27th. However, customers should be cautious as entering the existing car insurance expiration date before March 29 when subscribing to car insurance from Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, or KB Insurance through this service may result in a higher premium than on the insurers' official websites.

According to a comprehensive report by Asia Economy on the 20th, the financial authorities, non-life insurance industry, and fintech sector recently concluded consultations and decided to launch the car insurance comparison and recommendation service 2.0 from the 27th. The service was initially launched on January 19 last year as part of the financial authorities' innovative finance policy. It aimed to expand consumer choice by allowing users on platforms operated by Naver, Kakao, Toss, and others to compare, recommend, and subscribe to various insurance products from different insurers.

However, controversy arose when Samsung, DB, Hyundai, and KB Insurance, which hold over 85% market share in the car insurance market, applied a platform (PM) rate of 3% to car insurance sold through fintech platforms. Insurers apply different rates to insurance products depending on sales channels such as face-to-face, telemarketing (TM), and cyber marketing (CM), and the PM rate was newly introduced as a fourth rate. Consumers increasingly preferred to subscribe directly through the insurers' own websites rather than paying the higher platform fees, leaving the car insurance comparison and recommendation service virtually inactive. In response, the financial authorities pledged at the insurance reform meeting in September last year to unify the PM and CM rates and release the car insurance comparison and recommendation service 2.0, which has now been improved and launched.

Along with rate unification, the financial authorities also mandated that the commission rates fintech platforms receive from insurers be reduced from the existing 3% to a maximum of 1.5%. While major non-life insurers sought lower commissions through individual negotiations with fintech companies, it has been confirmed that they recently accepted the 1.5% commission rate. A fintech industry official stated, "Samsung, Hyundai, DB, and KB had differing opinions on the commission rates, but they have all recently agreed to the 1.5% PM commission. Although some contracts may not yet be finalized with signatures, all parties have agreed to start on the 27th," he said.

However, Samsung, DB, Hyundai, and KB Insurance set the effective date for the new CM rate for users of the car insurance comparison and recommendation service 2.0 as March 29, which is 30 days after the service launch. Therefore, if customers enter an existing car insurance expiration date on or before March 28 when subscribing to these major insurers' car insurance through the platform, the premium will be calculated and compared using the existing PM rate as before. If the date entered is March 29 or later, the cheaper CM rate will be applied for comparison. An industry insider explained, "This is unavoidable due to the insurers' policy on the insurance coverage start date," and added, "This will be separately notified to consumers at the launch of version 2.0."

Although the long-standing commission conflict surrounding the car insurance comparison and recommendation service has been resolved at 1.5%, and a fresh start is planned, it remains to be seen whether consumer benefits will increase. This is because the unification of rates and increased business expenses due to commission burdens may be passed on to consumers. For example, from a consumer perspective, if subscribing through the insurer's CM channel previously cost 1,000,000 KRW and through a fintech platform 1,030,000 KRW, the commission reduction now allows subscription through the platform at 1,015,000 KRW, but the insurer's CM channel will also be priced at 1,015,000 KRW. Consumers thus lose the option to subscribe at a cheaper rate.