'Toriappa' Yoon President-Elect's Pledge on Pet Insurance: Will It Finally Take Off This Time?

Pet Insurance (Reference Photo)

[Asia Economy Reporter Changhwan Lee] The Yoon Seok-yeol administration's decision to promote the activation of pet insurance has drawn attention from the insurance industry. Despite the increasing number of pet owners each year, the pet insurance market has not been activated for various reasons, raising the insurance industry's expectations for the new government.

According to the related industry on the 10th, the 20th Presidential Transition Committee selected 110 national tasks earlier this month and promised to activate pet insurance. The transition committee announced that it would work with financial authorities to promote customized pet insurance by implementing pet registration and establishing a simplified insurance claim system.

The transition committee's move to activate pet insurance is interpreted as a response to the fact that the size of the related insurance market is very small compared to the growth potential of the domestic pet market.

According to KB Management Research Institute, as of 2020, there were 6.04 million 'pet households' in Korea, accounting for 29.7% of all households in Korea. There are 14.48 million pet owners, meaning more than one in four Koreans live with pets. On the other hand, only 22,000 cases have subscribed to pet insurance, which is less than 1% compared to the estimated total number of pets in Korea (8.6 million).

The low pet insurance subscription rate has multiple causes. First, pet insurance costs are not cheap, starting at a minimum of 30,000 KRW per month, and the insurance subscription conditions are strict. In many cases, insurance companies refuse to insure elderly dogs, and there are limitations such as restricted coverage.

The lack of related systems is also a reason why pet insurance has not been activated. The government introduced a nationwide pet registration system in 2013 to protect animals and prevent abandonment, but the actual number of registered dogs is estimated to be only about 20-30%. Pet registration is a major condition for insurance subscription, but many pet owners hesitate to register due to inconvenience.

There is also the issue of standardizing veterinary medical services. Treatment costs vary by animal hospital, and some hospitals engage in excessive charging, making insurance companies reluctant to develop related insurance products.

Additionally, moral hazard problems exist, such as pet owners exploiting the similarity in appearance of animals to receive multiple insurance payments. As a result, only two to three domestic insurance companies actively sell pet insurance.

The transition committee plans to strengthen the pet registration system and simplify the insurance claim system, considering these causes.

An insurance industry official said, "Although the need for pet insurance is increasing socially, it has not been activated for various reasons," adding, "We hope the new government will improve policies well and grow the related market."

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