“Non-Life Insurance Industry Takes Measures to Prevent Moral Hazard and Fraud in Driver’s Insurance”

[이코노미스트 박지윤 기자] From July at the earliest, driver insurance coverage is expected to be significantly reduced. While the guarantee is reduced, the burden on consumers is expected to increase as the co-pay is charged up to 20%.

According to the insurance industry on the 30th, non-life insurance companies such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance will pay up to 20% of their own expenses for driver’s insurance’s traffic accident handling subsidy and attorney’s fees from July at the earliest. % will be added.

With this measure, the financial burden on insurance consumers has increased due to reduced coverage than before. Driver’s insurance is optional insurance, unlike auto insurance, which all vehicle owners must subscribe to. Covers the insured’s injuries and legal expenses incurred in accidents while driving.

According to the announcement of the General Insurance Association, the number of new driver insurance contracts last year was 4,928,692. Non-life insurers have strengthened sales promotion, believing that the size of the driver’s insurance market will grow further considering the number of vehicles owned.

In response, financial authorities such as the Financial Services Commission and the Financial Supervisory Service reportedly requested the insurance industry to take measures to prevent excessive competition in driver insurance and moral hazard among some subscribers.

In the past, driver’s insurance only guaranteed criminal settlements and the cost of hiring a lawyer in a fixed amount. However, criticism has been raised that in the case of duplicate subscriptions, a larger amount can be guaranteed than the amount actually incurred in criminal settlements, causing moral hazard and insurance fraud.

At the time, the maximum guaranteed amount of the special contract guaranteeing criminal settlement was ’30 million won upon death’, but 15 years later, it has increased to a maximum of 200 million won.

It is analyzed that the fact that the punishment for drivers has been strengthened has also had an effect on the rapid increase in interest in driver insurance. As the Yoon Chang-ho Act and the Min-sik Act were enacted due to drunk driving and accidents in school zones, issues related to safe driving and pedestrians have risen rapidly, and driver insurance products that guarantee legal fees have become popular.

ⓒThe Economist (“Economic News for Tomorrow” Unauthorized copying and redistribution prohibited)