KB Insurance Becomes First in Industry to Secure 18-Month Exclusive Rights for 'Index-Based Weather Insurance'

KB Insurance announced on the 14th that it has obtained an exclusive usage right for one year and six months from the General Insurance Association for its "KB Traditional Market Weather Damage Compensation Insurance," which compensates traditional market merchants for business losses caused by weather conditions.

This is the first time an insurance company has obtained an exclusive usage right for one year and six months. The General Insurance Association revised its agreement on protecting the development interests of new products this year, extending the maximum protection period for exclusive usage rights from the previous one year to one and a half years.

The KB Traditional Market Weather Damage Compensation Insurance is the first in the insurance industry to use weather phenomena as an index, providing compensation when a specific index is met. The acquisition of this exclusive usage right recognizes the originality of developing the first product in the industry to cover weather damages for traditional market merchants and acknowledges the innovative efforts to enhance consumer benefits.

Recently, cases of sharp declines in sales for traditional market merchants and small business owners have been increasing due to frequent abnormal weather events such as heavy rain, heat waves, and cold snaps. However, there were no insurance products available to cover business losses, making it difficult to manage such risks. In response, KB Insurance developed an insurance product that easily compensates for business interruption losses caused by weather damage to traditional market stores, which are vulnerable to weather. After two years of preparation, the company developed an index-based weather insurance product by combining meteorological observation data from the Korea Meteorological Administration with big data on traditional market sales.

The KB Traditional Market Weather Damage Compensation Insurance uses three weather indices-precipitation, highest temperature, and lowest temperature. If any of these indices exceed or fall below the set thresholds, compensation is paid automatically. Since compensation is provided based solely on objective weather data, without requiring separate proof of loss or damage verification procedures, quick payouts are possible and complaints related to compensation calculation are expected to decrease.

This product is a mutual insurance policy that embodies social values such as responding to the climate crisis and protecting small business owners as part of ESG (Environmental, Social, and Governance) management. It is significant in that it presents a new paradigm for the insurance industry regarding weather risk.

The KB Traditional Market Weather Damage Compensation Insurance operates as a group insurance product, where either the traditional market merchant association or local governments become the policyholder, and at least one-third of all stores in the market must participate. KB Insurance plans to collaborate with local governments and traditional market merchant associations nationwide to further develop this product into a regionally customized protection model, thereby strengthening the business safety net for traditional market merchants.

A KB Insurance representative stated, "The newly launched KB Traditional Market Weather Damage Compensation Insurance is an innovative insurance product that automatically compensates for sales declines caused by weather, based on quantifiable indices. It will help reduce the burden on traditional market merchants who previously had difficulty proving their losses and provide practical support to ensure stable business operations in response to the climate crisis."