[Insurance Tip ⑥] Heavy Rain and Typhoons Are Increasing... Do You Know About Pungsuhae Insurance?

[Asia Economy Reporter Changhwan Lee] Sujin Lee, who runs a coffee shop in Busan, recently signed up for small business flood and windstorm insurance after hearing news of an unprecedented typhoon approaching. She recalled the severe damage caused by flooding in her cafe due to a typhoon and heavy rain just two years ago, and upon hearing from those around her about the government-supported flood and windstorm insurance, she decided to enroll.

As natural disasters such as heavy rain, typhoons, and floods become increasingly frequent and damaging, the importance of flood and windstorm insurance is growing. Flood and windstorm insurance is a government-established disaster management insurance policy created in 2006 to compensate citizens for damages caused by unexpected natural disasters such as typhoons, floods, heavy rain, tidal waves, strong winds, heavy snow, and earthquakes.

The government and local governments subsidize a portion of the insurance premiums, ranging from 70% to 100%, allowing subscribers to enroll at very affordable rates.

Eligible applicants include homeowners, agricultural and forestry greenhouses (including vinyl houses), and commercial buildings and factories (small business owners). Both property owners and tenants can subscribe to the insurance.

On average, the annual insurance premium paid by subscribers is about 16,000 KRW for homes, 102,000 KRW for greenhouses, and 38,000 KRW for commercial buildings. Since the government covers most of the premium, disaster risks can be mitigated for just a few thousand won per month. Compensation limits are up to 150 million KRW for factories, 100 million KRW for commercial buildings, 72 million KRW for homes, and 50 million KRW for inventory assets.

[Image source=Yonhap News]

Starting this year, the law has been amended so that low-income households do not have to pay any premiums at all. The government fully subsidizes flood and windstorm insurance premiums for low-income households actually residing in homes that have previously received flood and windstorm insurance payouts or government disaster relief funds, as well as for low-income households living in designated high-risk flood and windstorm insurance promotion areas. If you live in a frequently flooded area such as a semi-basement or first-floor home, it is especially important to actively enroll in flood and windstorm insurance.

Despite its many benefits, the subscription rate for flood and windstorm insurance remains low. According to the Ministry of the Interior and Safety, as of July this year, only 7.1% of small business owners had subscribed to flood and windstorm insurance. Although the rate has increased annually from 1% in 2020 and 4.7% in 2021, many small business owners still lack awareness or do not feel the need for the insurance.

Flood and windstorm insurance is available through six companies: Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, NH Nonghyup Property & Casualty Insurance, and Hanwha General Insurance. Since this insurance was not originally designed for profit, there are not many insurers offering these products.

Due to the low subscription rate, some private companies also support flood and windstorm insurance premiums as part of their small business support initiatives. For example, Baedal Minjok and Hyundai Marine & Fire Insurance have supported small business owners' flood and windstorm insurance premiums this year.

Joo Byung-kwon, General Insurance Department Head at the General Insurance Association, emphasized, "Flood and windstorm insurance is the minimum natural disaster preparedness measure, but many people face difficulties in recovery due to not having subscribed. Since the premium burden is not large, it is necessary to actively enroll in flood and windstorm insurance."

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