By Yoon Ja-young
Staff Reporter
Every driver has the right to subscribe to an auto insurance policy and the insurers must not reject drivers under any circumstances, the financial regulatory body ruled.
Auto insurance is a must for all, but some drivers have been rejected by insurance companies for various reasons. Some non-life insurers have refused to take subscriptions by teenagers, residents from high accident rate areas, drivers of expensive imported cars, for whom insurance payouts are likely to be bigger, or even to drivers who have an accident free record, as they pay small insurance premiums.
These drivers were forced to subscribe to insurance policies jointly managed by non-life insurers, at premiums 5 to 10 percent higher than ordinary policies. Some insurers press drivers to subscribe to other insurance policies in exchange for subscribing to the auto insurance.
Non-life insurers said they recently received an official document from the Financial Supervisory Service (FSS), ordering them to stop rejecting auto insurance subscriptions. The regulator plans to set up a consultation office at the General Insurance Association of Korea, to collect grievances from rejected drivers.
Insurers will have to accept all drivers except those with a record of three accidents or more during the last three years and those related to insurance fraud. When refusing drivers, insurance companies should clarify the reason in a document sent to the driver.
``Some non-life insurers have been harming consumer trust in the insurance industry by rejecting insurance subscriptions. Most drivers, excluding those who habitually cause accidents are, entitled to subscribe to any insurance policy they want,'' an official at the financial regulator said.
Insurance companies, however, are protesting the measure as unfair and that it damages their underwriting rights. ``We don't reject drivers. We just induce some drivers to take insurance policies where the industry jointly takes the risk,'' said a PR official of a non-life insurance company. He said the underwriting process is based on statistics. ``Subscribers to ordinary policies will be affected negatively,'' he said.