DB Insurance, Coupang Logistics Center Insurance Payout Up to 7 Billion KRW... "Factor for Mid- to Long-Term Premium Increases"

[Asia Economy Reporter Oh Hyung-gil] The Coupang Deokpyeong Logistics Center in Icheon, Gyeonggi Province, where a fire broke out on the 17th, is insured under a comprehensive property insurance policy worth 400 billion KRW, but it is expected that the actual cost borne by the non-life insurance companies will be only several billion KRW.

According to the insurance industry on the 22nd, the insurers jointly underwriting Coupang's logistics center insurance contract are four non-life insurance companies: DB Insurance, KB Insurance, Lotte Insurance, and Heungkuk Fire & Marine Insurance.

The insurer with the highest liability share is DB Insurance at 60%, followed by KB Insurance at 23%, Lotte Insurance at 15%, and Heungkuk Fire & Marine Insurance at 2%.

If the damage investigation confirms that the building, facilities, and inventory assets were all completely destroyed by fire, Coupang is expected to receive about 360 billion KRW in insurance claims, excluding 10% of the loss amount (insurance coverage amount).

However, since DB Insurance is subscribed to Excess of Loss Reinsurance (XOL), it is expected that even assuming the maximum loss scale, the insurance payout the company must bear will be up to 7 billion KRW.

A DB Insurance official explained, "Because we are subscribed to Excess of Loss Reinsurance, the maximum compensation amount will be up to 7 billion KRW due to the deductible limit. The excess loss amount will be borne by the reinsurers or retrocessionaires."

The four non-life insurers have reinsurance contracts with Korean Re, so Korean Re's burden is expected to increase.

A Korean Re official said, "Since insurance claims are filed by the primary insurers, and the exact amount has not been finalized by the primary insurers, it is difficult to estimate the amount prematurely."

An official from the non-life insurance industry explained, "In the mid to long term, it is indeed a factor for premium increases," but added, "Since the insurers' cost burden is not large, it is not at a level that requires immediate premium hikes."

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