Pet, Travel, and Weather Insurance... 'Mini Insurance' Market to Open Next Month

Relaxation of Capital Requirements for Small-Amount Short-Term Insurance
Allowance for Multiple Insurance Types Handling

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] Starting next month, small-amount short-term insurance covering various everyday risks such as pet insurance, leisure and travel insurance, and weather insurance will be introduced.

According to financial authorities and the industry on the 29th, the amendment to the "Insurance Business Act Enforcement Decree" for the introduction of small-amount short-term specialized insurance was approved at the Cabinet meeting on the 25th. The amendment will be enforced from the 9th of next month after the promulgation process.

With the amendment of the enforcement decree, the minimum capital requirement for small-amount short-term insurance companies has been relaxed to 2 billion KRW. Previously, establishing a new comprehensive insurance company required a high capital of over 30 billion KRW, making it difficult for new entrants. Also, except for long-term coverage (pensions, nursing care) and high-capital required categories (nuclear, automobile, etc.), all insurance categories are allowed to be handled (multiple categories allowed).

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.

With the introduction of small-amount short-term specialized insurance, it is expected that affordable and essential small-amount short-term insurance such as pet insurance, leisure and travel insurance, and weather insurance will be activated.

In particular, regarding the recently increasing pet treatment costs, it is expected to reduce the burden on 6.4 million pet-owning households (about 8.6 million pets) by providing necessary coverage at affordable costs. According to the Financial Services Commission, the number of pet-related insurance contracts in Korea is 22,000, which is only 0.25% of the total number of pets and 1.1% of registered pets. The size of the related domestic insurance market is also significantly smaller compared to 1.5 trillion KRW in the UK, 1 trillion KRW in the US, and 700 billion KRW in Japan, standing at 11.2 billion KRW.

The Financial Services Commission expects high demand for licenses for small-amount short-term specialized insurance and plans to conduct a preliminary demand survey for about five weeks until the 30th of next month to facilitate smooth review. Subsequently, consulting on business plan preparation and priority review will be provided to companies submitting the demand survey for license applications.

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