Activation of Small-Amount Short-Term Insurance for Pets, Leisure, and Travel... Reducing Document Burden for Insurance Consumers

Relaxation of Capital Requirements for Small-Sum Short-Term Insurance... Expansion of Coverage to Liability, Costs, and Animals
Regulatory Reforms for Subsidiaries to Facilitate Insurers' Investment in Healthcare Specialists and MyData
Establishment of External Verification Procedures for Liability Reserves to Enhance Insurance Industry Soundness

[Asia Economy Reporter Kwangho Lee] The government has newly introduced the 'Specialized Small-Amount Short-Term Insurance Business' system and revised entry regulations to activate customized small-amount short-term insurance that consumers want. Accordingly, affordable and essential small-amount short-term insurance such as pet insurance, leisure and travel insurance, and weather insurance is expected to be revitalized. In addition, the offline paperwork burden for insurance consumers, such as insurance subscription, insurance claim filing, and finding hidden insurance money, will be greatly reduced.

The Financial Services Commission announced on the 25th that the amendment to the Enforcement Decree of the Insurance Business Act, including these contents, has passed the Cabinet meeting. This amendment will be enforced from the 9th of next month after going through the promulgation process.

First, with this amendment to the Enforcement Decree, the introduction of the specialized small-amount short-term insurance business from the 9th of next month will expand opportunities for new businesses with innovative technologies and ideas to enter the insurance industry.

Previously, establishing a new comprehensive insurance company required a high capital of over 30 billion KRW, making it difficult for new entrants. However, the capital requirement has been relaxed to 2 billion KRW to suit the characteristics of small-amount short-term insurance, allowing various insurance types to be handled.

As a result, various mini-insurances such as pet insurance, leisure and travel insurance, weather insurance, and lawyer insurance, which had not been activated so far, are expected to be revitalized. In particular, regarding the recently increasing pet treatment costs, providing essential coverage at an affordable cost is expected to reduce the burden on 6.4 million pet-owning households (about 8.6 million pets).

The insurance period for small-amount short-term insurance is set at one year (renewable), the insurance payout limit is 50 million KRW, which is the deposit protection limit, and the annual total premium income is set at 50 billion KRW.

Additionally, the amendment allows insurance companies to own more than 15% of shares in healthcare specialized companies and MyData companies.

The amendment also establishes grounds for insurance companies (associations) to inquire administrative information online, such as resident registration certificates, family relation certificates, driver's licenses, and construction machinery registration certificates, with consumer consent.

Furthermore, from now on, insurance companies with total assets of 1 trillion KRW or more must undergo verification of the adequacy of their reserve liabilities by external independent actuaries. Especially considering the complexity of reserve liability calculation methods due to the introduction of IFRS17 in 2023, verification will be conducted not only on the size of reserve liabilities but also on the calculation standards and methods.

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