Drunk Driving Deductible 10 Million Won... "Positive Impact on Car Insurance Loss Ratio Improvement" (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] The non-life insurance industry has welcomed the automobile insurance system improvement plan announced by the government on the 19th.

The government decided to revise the Enforcement Rules of the Automobile Damage Compensation Guarantee Act within the second half of this year so that drivers involved in drunk driving accidents will bear accident handling costs up to 15 million KRW.

Currently, in drunk driving accidents, non-life insurance companies compensate the victims and then claim accident burden fees from the drunk drivers up to 3 million KRW for personal injury accidents and 1 million KRW for property damage accidents. However, there have been criticisms that the low standard for accident burden fees for drunk drivers limits the economic sanctions' effectiveness and the raising of awareness.

In particular, insurance payments used for compensating drunk drivers cause harm to other honest policyholders. The annual insurance payout for drunk driving accidents in Korea amounts to approximately 330 billion KRW, with an average of 10 million KRW paid for personal injury damages and 4.26 million KRW for property damage per case.

Additionally, the insurance exemption system applied to unlicensed driving accidents will be expanded to include drunk driving and hit-and-run accidents. Not only unlicensed driving but also drunk driving and hit-and-run cases where compensation exceeds 150 million KRW for personal injury 2 and 20 million KRW for property damage will not be covered by insurance companies.

For vehicles such as imported cars that incur relatively high repair costs, automobile insurance premiums will be surcharged.

Non-life insurance companies expect that this system improvement will help improve the automobile insurance loss ratio, which is a cause of premium increases. It is analyzed that expanding the drunk driving accident burden fee and the exemption of voluntary insurance each have an impact of about 0.4% on premiums.

An industry official said, "With system improvements such as strengthening drunk driving accident burden fees, expanding exemptions, and reinforcing surcharges on insurance premiums for vehicles with high repair costs, unnecessary insurance fund leakage can be prevented and consumer rights can be enhanced," adding, "Although automobile insurance is currently facing difficulties with an operating loss of 1.6445 trillion KRW last year, this system improvement is expected to have an impact on improving the automobile insurance loss ratio."

Furthermore, the government plans to establish detailed review standards for medical expenses paid through automobile insurance by May. The official added, "Issues such as overtreatment in minor accidents may be discussed through the automobile insurance policy council in the future."

This content was produced with the assistance of AI translation services.