Insurance Sector and Six Local Governments to Launch 'Mutual Growth Insurance'... Enrollment Begins in Q3

Gyeongnam, Gyeongbuk, Gwangju, Jeonnam, Jeju, and Chungbuk Selected
KRW 2 Billion in Insurance Support per Local Government
Credit Life Insurance Introduced; Localized Products Such as Climate Insurance Launched

Six local governments, including Gyeongsangnam-do, which have been selected as program operators, will launch a total of KRW 2 billion worth of Mutual Growth Insurance starting from the third quarter of this year. In the case of life insurance, all local governments will introduce a credit life insurance product, which will pay off loans through insurance benefits in the event of death or illness.

Lee Eogwon, Chairman of the Financial Services Commission, is speaking at the 'Public-Private Joint Token Security Council Kickoff' meeting held on March 4, 2026, at the Government Seoul Office in Jongno-gu, Seoul. Photo by Jo Yongjun

Six Local Governments to Offer KRW 2 Billion in Mutual Growth Insurance... Credit Life Insurance to Be Launched

On March 16, Lee Okwon, Chairman of the Financial Services Commission, announced that he had attended a signing ceremony for the activation of mutual growth insurance products in the insurance sector and signed a business agreement with the six local governments.

Chairman Lee stated, "The insurance industry has long served as a reliable pillar, filling the welfare gaps left by national and public insurance systems and supporting the livelihoods of citizens. However, it is also true that insurance has not provided sufficient coverage for vulnerable groups who are more exposed to severe financial shocks in the event of unexpected incidents such as illness or injury."

He added, "This Mutual Growth Insurance program is highly significant in narrowing the insurance protection gap for the vulnerable. Particularly, since the insurance demand was identified through voluntary public calls from local governments, the insurance products provided will be optimally tailored to the needs and circumstances of local small business owners."

Previously, in August last year, the insurance sector established a KRW 30 billion Mutual Growth Fund to support free enrollment in Mutual Growth Insurance for small business owners and vulnerable groups.

Subsequently, in November last year, a call for Mutual Growth Insurance products was held, targeting all local governments nationwide, resulting in the selection of six local governments—Gyeongnam, Gyeongbuk, Gwangju, Jeonnam, Jeju, and Chungbuk—as program operators.

Accordingly, each local government will offer one life insurance product (KRW 1 billion) and one general insurance product (KRW 1 billion), totaling KRW 2 billion in Mutual Growth Insurance. Of this, KRW 1.8 billion will be covered by the insurance sector's Mutual Growth Fund, while the remaining KRW 200 million will be covered by the local governments.

For life insurance, all local governments will launch credit life insurance products. Credit life insurance pays off loans through insurance benefits in the event of death, cancer, cerebral hemorrhage, acute myocardial infarction, or other illnesses.

Additionally, financial institutions will apply preferential interest rates to policyholders of credit life insurance, and the guarantee rate for the Sunshine Loan will be reduced. However, for new guarantees, the reduced rate is applied only in the first year, and the regular guarantee rate will be applied from the second year onward.

For general insurance, a variety of products tailored to the characteristics of each local government will be introduced. Representative examples include climate insurance for construction sites in Jeju, which compensates daily workers for income loss when work is suspended due to heatwaves; Cyber Care Insurance in Chungbuk, which compensates small business owners for damages incurred from direct transaction fraud; and fire liability insurance in Gyeongnam, which covers fire damage to small restaurants. The specific eligibility criteria and coverage details for Mutual Growth Insurance will be determined by a working group jointly formed by local governments and the insurance sector.

Insurance companies have announced plans to utilize the remaining Mutual Growth Fund (approximately KRW 17.4 billion) to expand the number of participating local governments and diversify the range of products, including dementia insurance.

KRW 2 Trillion in Inclusive Finance Planned Over the Next Five Years... Three Pillars Including Free Insurance Enrollment

At the signing ceremony, the insurance sector also announced its plans to promote inclusive finance. Over the next five years, the industry aims to provide KRW 2 trillion in inclusive finance, focusing on three pillars: free insurance enrollment, reducing the burden of insurance premiums and interest payments, and promoting social contribution initiatives.

First, the sector will support free enrollment in Mutual Growth Insurance using the total KRW 30 billion Mutual Growth Fund. Additionally, the Korea Inclusive Finance Agency will expand its free insurance products for vulnerable groups. The existing insurance products, which only covered basic needs such as cancer diagnosis benefits and accident/illness coverage for children and guardians in single-parent families, will be upgraded to include liability insurance in case children cause harm to others and additional coverage for sequelae such as burns or scars.

There will also be insurance premium discount products that are directly felt in daily life. Starting April 1, children's insurance premiums will be discounted for a certain period during parental leave or maternity leave to help overcome low birth rates. The industry will also recognize military driver experience for car insurance discounts, offer hourly motorcycle insurance to reduce the insurance burden for delivery workers, and implement a new discounted-premium system for substitute drivers with accident histories, allowing them to pay fair premiums and obtain insurance coverage.

To ensure people can maintain their insurance despite economic difficulties, the industry will operate premium payment deferment and suspension systems. Premium payment deferment for parental leave or maternity leave will be available starting April 1 this year, and a suspension system for indemnity insurance for service members during military service will be introduced, allowing them to pause coverage and premium payments during their service period.

The burden of interest on insurance policy loans will also be eased. From April 1, interest repayment for insurance policy loans will be deferred during parental leave or maternity leave, and preferential interest rates will be provided to senior citizens aged 65 or older.

Chairman Lee stated, "Please actively promote effective burden reduction measures and diverse social contribution initiatives that people can truly feel in their daily lives," adding, "The government will also actively support the insurance sector so that inclusive finance can take root in the field."

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