Capital Requirements for Specialized Insurers like Pet Dog and Traveler Insurance to Be Lowered

'Introduction of Small-Amount Short-Term Specialized Insurance' Insurance Business Act Amendment Passed by the National Assembly

On the 19th, the amendment to the "Act on the Duties and Scope of Judicial Police Officers" (Judicial Police Act) was passed at the plenary session held at the National Assembly. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Oh Hyung-gil] It will soon be possible to establish small-amount short-term specialized insurance companies with capital of 1 billion KRW or more that focus on pet insurance, travel insurance, and other specialized products.

On the 19th, the Financial Services Commission announced that the amendment to the Insurance Business Act, which introduces small-amount short-term specialized insurance business and relaxes capital requirements, has passed the plenary session of the National Assembly.

Under the current law, a high capital requirement is imposed regardless of risk scale to operate an insurance business, making it difficult for new entrants. In the past five years, the only newly established insurer has been Carrot General Insurance, an internet-only non-life insurer.

Capital requirements by insurance category are 20 billion KRW each for life insurance and automobile insurance, and 10 billion KRW for disease insurance. Handling all categories in both life and non-life insurance requires 30 billion KRW.

However, going forward, an insurance business specializing in low-risk small-amount short-term insurance will be introduced, and capital requirements will be significantly relaxed. The minimum capital will be an amount prescribed by Presidential Decree within the range of 1 billion KRW or more.

This will enable new entrants with small capital to handle small-amount short-term insurance closely related to consumers' daily lives, such as pet insurance, electric scooter insurance, and travel insurance, which is expected to activate innovative products that meet consumer demands.

However, the types of insurance products that small-amount short-term specialized insurers can handle, insurance periods, maximum insurance payout per contract, and total annual premium income will be specified in detail by future Presidential Decree.

The amendment also simplifies procedures for insurers' concurrent and incidental business reporting and approval processes for subsidiary ownership, reducing overlapping administrative burdens.

If an insurer intends to concurrently operate financial businesses requiring permits or registration under other laws, such as collective investment business, investment advisory business, or discretionary investment business, it can do so without separate reporting. Similarly, if an insurer intends to operate incidental businesses identical to those reported and announced by another insurer, it can do so without separate incidental business reporting.

The approval process related to insurers' subsidiary ownership is also simplified. If approval for subsidiary establishment was granted based on stock ownership requirements, the approval burden is eased, and prior reporting for establishing asset management-related subsidiaries is changed to post-reporting.

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