By Chung Ah-young
The nation's top financial regulator said Monday it is considering expanding insurance coverage of publicly used facilities vulnerable to disasters, possibly from next year.
The plan comes as a series of accidents ― including a concert mishap in Pangyo, Gyeonggi Province and the Sewol ferry sinking disaster ― revealed the vulnerability of risk management and the failure to provide proper compensation to victims.
The Financial Services Commission (FSC) said facilities such as bridges, tunnels, railroads, subways, hospitals, concert halls and "hagwon" or extracurricular cram schools are likely to be subject to mandatory insurance for various kinds of disasters.
The regulator is currently consulting with 13 other relevant government agencies to form a task force to strengthen the social safety net in the case of catastrophes.
"If we set up a detailed plan based on consultations with other agencies, we will implement it as soon as possible," an FSC official said.
Insurance experts have been assessing the insurance situation of major facilities in Korea to come up with measures to improve the system.
Currently, owners and operators of the large-scale facilities are required to take out liability insurance. For example, publicly used facilities such as department stores are insured against fire while vessels are insured against maritime accidents such as oil pollution damage.
Smaller buildings and publicly used spaces are subject to voluntary insurance. However, the voluntary insurance purchase rate is only 27 percent, compared to 94 percent in the case of facilities required to purchase insurance.
Thus, bridges, tunnels, railroads, subways and hospitals, concert halls and "hagwon" are often not covered by insurance.
There is a lack of legal standards about the compensation limits for damages when a disaster actually occurs, and also a lack of penalties for those who do not abide by the mandatory insurance requirements.
Under the comprehensive insurance plan, the government is considering lowering the mandatory insurance threshold for publicly used spaces from the current standard of 3,000 square meters to 2,000 square meters.
Fires, explosions and collapses, but not war and earthquakes, will be comprehensively covered by the new insurance standards.
Victims can be compensated with up to 100 million won, while property damages will likely be covered with a range of 20 million won to 100 million won in accordance with the levels of risks.
The FSC also plans to revise the relevant insurance clauses concerning compensation for part-timers and temporary workers in case of disasters given that some crew members of the ferry Sewol were not properly compensated as they were not regular workers.
FSC Chairman Shin Je-yoon has said at a recent meeting with representatives of the insurance industry that the government will strengthen the role of private insurance companies to effectively cover victims' damages in cases of massive disasters.
The nation's top financial regulator said Monday it is considering expanding insurance coverage of publicly used facilities vulnerable to disasters, possibly from next year.
The plan comes as a series of accidents ― including a concert mishap in Pangyo, Gyeonggi Province and the Sewol ferry sinking disaster ― revealed the vulnerability of risk management and the failure to provide proper compensation to victims.
The Financial Services Commission (FSC) said facilities such as bridges, tunnels, railroads, subways, hospitals, concert halls and "hagwon" or extracurricular cram schools are likely to be subject to mandatory insurance for various kinds of disasters.
The regulator is currently consulting with 13 other relevant government agencies to form a task force to strengthen the social safety net in the case of catastrophes.
"If we set up a detailed plan based on consultations with other agencies, we will implement it as soon as possible," an FSC official said.
Insurance experts have been assessing the insurance situation of major facilities in Korea to come up with measures to improve the system.
Currently, owners and operators of the large-scale facilities are required to take out liability insurance. For example, publicly used facilities such as department stores are insured against fire while vessels are insured against maritime accidents such as oil pollution damage.
Smaller buildings and publicly used spaces are subject to voluntary insurance. However, the voluntary insurance purchase rate is only 27 percent, compared to 94 percent in the case of facilities required to purchase insurance.
Thus, bridges, tunnels, railroads, subways and hospitals, concert halls and "hagwon" are often not covered by insurance.
There is a lack of legal standards about the compensation limits for damages when a disaster actually occurs, and also a lack of penalties for those who do not abide by the mandatory insurance requirements.
Under the comprehensive insurance plan, the government is considering lowering the mandatory insurance threshold for publicly used spaces from the current standard of 3,000 square meters to 2,000 square meters.
Fires, explosions and collapses, but not war and earthquakes, will be comprehensively covered by the new insurance standards.
Victims can be compensated with up to 100 million won, while property damages will likely be covered with a range of 20 million won to 100 million won in accordance with the levels of risks.
The FSC also plans to revise the relevant insurance clauses concerning compensation for part-timers and temporary workers in case of disasters given that some crew members of the ferry Sewol were not properly compensated as they were not regular workers.
FSC Chairman Shin Je-yoon has said at a recent meeting with representatives of the insurance industry that the government will strengthen the role of private insurance companies to effectively cover victims' damages in cases of massive disasters.
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