From Travel and Leisure to Cancer... The Affordable and Easy Mini Insurance Market is Booming

Detailed Criteria Established for 'Small Amount and Short Term Specialized Insurers'

Small Amount and Short-Term Insurance Products Available for Handling (Source: Financial Services Commission)

[Asia Economy Reporter Oh Hyung-gil] The mini insurance market closely linked to daily life is expected to heat up. The capital requirement for small-amount short-term specialized insurance companies will be drastically lowered from 30 billion KRW to 2 billion KRW. Additionally, external verification of insurers' adequacy of reserve liabilities will be mandated.

Mini insurance, also known as simple insurance, small-amount short-term insurance, or daily life-oriented insurance, refers to products with simple coverage, a short insurance period of less than one year, and low premiums.

The Financial Services Commission recently announced a legislative notice for the amendment of the "Insurance Business Act Enforcement Decree," which introduces small-amount short-term specialized insurance business and promotes digital transformation of the insurance industry, including healthcare activation.

The minimum capital for small-amount short-term specialized insurance companies has been set at 2 billion KRW. This reflects the intent to activate small-amount short-term insurance while considering the fulfillment of human and physical requirements for consumer protection and the possibility of meeting financial soundness (RBC) standards. The average capital of about 2.5 billion KRW in Japan, where small-amount short-term insurance companies are already active, was also taken into account.

The financial authorities plan to review additional adjustments to capital requirements in consideration of future new entrants and the stable establishment of the system. Except for long-term coverage (pensions, nursing care) and high-capital-required categories (nuclear, automobile, etc.), all categories will be allowed to promote small-amount short-term insurance. To consider unexpected risk occurrences, the enforcement decree and supervisory regulations will set the insurance period to one year.

Expectations for Activation of Customized Small-Amount Short-Term Insurance

Insurance companies are striving to secure young customers, such as those in their 20s and 30s, by launching mini insurance products.

Dongyang Life Insurance is selling a product designed to provide practical coverage with a premium under 1,000 KRW per month for 30-year-olds, allowing young adults burdened by expensive cancer insurance or customers who already have cancer insurance but want to strengthen insufficient coverage to join without burden.

Mirae Asset Life Insurance's online mini cancer insurance series surpassed 4,000 new contracts last October. Mirae Asset Life cited affordable premiums as the key to the product's popularity, explaining that consumers focused on a product that covers all major cancers for just a few hundred won.

Kyobo Life Insurance also introduced a new concept of mini insurance. They are selling mini coverage insurance and mini savings insurance that significantly reduce premium burdens while providing coverage and lump-sum savings for the necessary period.

Digital non-life insurer Carrot General Insurance provides necessary coverage for drivers with a premium of 990 KRW. Hanwha General Insurance and MG General Insurance also sell products that focus on covering drivers' criminal liabilities and costs arising from legal administration for less than 3,000 KRW per month.

Insurance products that cover risks arising from leisure activities are also being sold. NH Nonghyup General Insurance sells small-amount short-term insurance that covers on a daily basis (24 hours) with premiums under 2,000 KRW, and Carrot General Insurance has introduced the concept of a switch that is turned on only when needed, allowing customers to select one leisure activity such as golf, hiking, or fishing each time the switch is turned on to receive coverage.

KB Insurance sells products that provide not only basic driver insurance coverage such as automobile accident fines and lawyer fees but also coverage with the nature of travel, leisure, and golf insurance, including post-leisure activity disabilities, golf equipment damage, highway and weekend driving injuries, and hit-and-run uninsured injuries.

The insurance industry expects new types of mini insurance products to be launched. This is because the capital requirement has been relaxed, allowing the establishment of small-amount short-term specialized insurance companies from the second half of the year. Mini insurance products, which have so far focused on cancer insurance and automobile insurance, are expected to shift to daily life-oriented products related to consumers' lifestyles.

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