[Become an Insurance Insider] Driver's Insurance: Having Two Policies Does Not Double Your Coverage

[Editor's Note] Difficult insurance, a clear explanation of insurance that remains confusing even after listening. There is no bad insurance in the world, only insurance that doesn't fit me. Following easy-to-understand insurance explanations will not be far from becoming an 'insurance insider.'

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] With the implementation of the so-called 'Minsik Act,' the number of people subscribing to driver insurance is increasing. Although driver insurance is considered the hottest product in the non-life insurance industry in the first half of this year, caution is needed when subscribing.

According to the Insurance Research Institute on the 8th, as laws related to children's traffic safety have been strengthened, the initial premiums for driver insurance in the second quarter by non-life insurers surged about twice compared to the same period last year.

The initial premiums for driver insurance in the second quarter increased by 98.9% compared to the same period last year, and the gross premiums increased by 10.3% year-on-year to 1.117 trillion KRW.

Driver insurance is a product designed to cover losses such as fines, traffic accident handling support funds (including criminal settlement fees), and attorney fees that are not compensated by automobile insurance when a traffic accident occurs.

It has been found that drivers in their 30s and 40s mainly subscribe to driver insurance.

The proportion of new driver insurance subscribers by age group from December 2018 to June 2020 showed a 7.7 percentage point decrease in those aged 60 and over, while increasing by 2.6 percentage points and 3.1 percentage points in their 30s and 40s, respectively.

The institute analyzed that the increase in the proportion of subscribers in their 30s and 40s is because this age group is more likely to be raising children and thus responded sensitively to the revision of children's traffic safety laws.

In particular, the proportion of subscribers holding two or more driver insurance policies has recently increased. The main coverages of driver insurance cannot be compensated redundantly.

The proportion of driver insurance subscribers holding two or more policies was around 19.3% to 20.1% until March 2020 but rose after April, reaching 22.7% in June.

The main coverages of driver insurance, such as fines, traffic accident handling support funds (including criminal settlement fees), and attorney fees, are covered under actual loss conditions and are not compensated redundantly in the event of a traffic accident. Even if subscribed redundantly, compensation is proportional only to the actual costs.

Experts pointed out that while the increase in multiple subscriptions may be due to 'upselling' to increase coverage amounts, consumers who subscribe redundantly to the same coverage may incur unnecessary losses, so systematic management is needed during the sales process.

Park Hee-woo, a research fellow at the Insurance Research Institute, said, "Insurance companies need to encourage driver insurance subscriptions among the elderly aged 60 and over, where traffic accident occurrences are relatively rapidly increasing," and added, "It is necessary to strengthen management to prevent unnecessary redundant subscriptions by consumers."

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