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| Seen is a school zone in front of an elementary school in Seoul, March 25. / Korea Times photo by Ko Young-kwon |
By Park Jae-hyuk
Samsung, Hyundai, Meritz and several other general insurance companies here have begun to take advantage of tightened safety regulations in school zones to offset their deteriorating profits caused by low interest rates and the coronavirus pandemic, according to industry officials, Wednesday.
Dubbed the "Min-sik Law" named after a nine-year-old boy killed by a car in front of his elementary school in Asan, South Chungcheong Province, in September 2019, the new law stipulates that drivers injuring children under 13 when driving in school zones at more than 30 kilometers per hour can face up to 15 years in prison or a 30 million won ($24,000) in fine.
Those who caused a fatal accident in the zones can be sentenced to life in prison.
Following the new regulations that went into effect March 25, most insurers in Korea increased their driver insurance coverage to 30 million won from 20 million won starting this month.
KB Insurance took a more preemptive step, as it extended its driver insurance coverage on the day the law went into effect.
In addition, the internet-only Carrot General Insurance announced in January that it had begun to sell driver insurance that covers up to 20 million won in fines and up to 5 million won in lawyer's fees if a policyholder pays just 990 won a month.
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| A Samsung Fire & Marine Insurance's blog on the "Min-sik law" / Captured from Samsung Fire & Marine website |
They have induced drivers to get insured, by alerting them to possible penalties.
In Korea, driver's insurance is not legally mandated, unlike car insurance.
Driver's insurance covers fines and legal expenses, while car insurance guarantees compensation for property losses from accidents.
According to the General Insurance Association of Korea, the loss ratio from driver's insurance stood at 70 percent on average in 2019, while that from car insurance exceeded 100 percent.
"In terms of profitability, driver's insurance is an attractive product for insurers as its loss ratio has remained low," an insurance company official said.
In this regard, non-life insurers expect driver's insurance to become a new income source amid the worsening industry outlook.
Data from the Financial Supervisory Service showed a combined net income of the nation's general insurers was 2.2 trillion won last year, down 31.7 percent from a year earlier.
