By Kim Jae-won
Insurance companies will offer extended warranty services for consumer electronics from July as the government has loosened regulations on insurance sales agencies, enabling electronics retailers to sell the services.
The Financial Services Commission (FSC) said Monday that it changed insurance agency regulations last month to diversify channels for insurance sales.
With the new regulations, electronics retailers such as Lotte Hi-mart, department stores and discount chains, can sell extended warranty services for refrigerators, laptop computers and tablet PCs, among others, after being registered as insurance sales agencies.
"We aim to offer various insurance sales channels to consumers with the new regulations, which will be effective from July," said FSC official Lee Myung-joon.
It is common for electronics retailers such as Best Buy of the U.S. and Canada's Future Shop, to sell extended warranty products to consumers, but such services have not been popular here due to strict government regulations on insurance sales agencies.
Lee said the deregulation is part of the government's effort to boost financial markets by loosening regulations on the industry.
The financial regulator said extended warranty insurance products will be offered to consumers in addition to standard warranties on new items provided by manufacturers. Local electronics manufacturers usually give one-year warranties to consumers.
Insurance companies are set to develop extended warranty services for consumer electronics. They said premiums on the services may differ by warranty period, but did not unveil how much they will be. The insurance products will cover mechanical failure from owner abuse as well as normal usage.
AIG Korea said it considers launching new extended warranty services to cope with changing business circumstances. The local unit of the American International Group said it has offered one-year warranties for 10 major consumer electronics, including refrigerators and washers, to both manufacturers and consumers, but its sales have been limited due to a lack of channels.
They also plan to discuss this matter with consumer electronics retailers, including the largest player, Lotte Hi-mart, in the near future.
Consumers said they wish the insurance services could cover a long period of time, up to at least three years.
"Electronics products have no problems for about three years after we buy them. If insurance companies cover products longer than three years, I am interested in buying them," said Lim Soo-hayng, 34, a housewife in Ilsan, Gyeonggi Province.
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