Insurance CEOs to be grilled at upcoming parliamentary audit over high-cost disaster policies

From left, DB Insurance CEO Jeong Jong-pyo, KB Insurance CEO Koo Bon-wook and NH NongHyup Property & Casualty Insurance CEO Song Chun-soo / Courtesy of each company

Lawmakers are set to target flood and windstorm insurance during a parliamentary audit scheduled for Tuesday, summoning CEOs of major property insurers over high premiums.

While the insurance industry argues that flood and windstorm insurance should not be compared directly with other public insurance programs, lawmakers note that, like similar policies, government funds subsidize part of the premiums. They plan to press insurers on their justification for the high rates.

Reps. Suh Bum-soo and Park Duk-hyum of the main opposition People Power Party called DB Insurance CEO Jeong Jong-pyo, KB Insurance CEO Koo Bon-wook and NH NongHyup Property & Casualty Insurance CEO Song Chun-soo to appear before the National Assembly’s Public Administration and Security Committee audit. These three companies together dominate the flood and windstorm insurance market.

The lawmakers claim that insurers have been reaping excessive profits, citing the relatively low loss ratios compared with crop disaster insurance.

According to data they provided, the average net loss ratio for seven insurers offering flood, windstorm and earthquake coverage between 2022 and 2024 was 32 percent — about one-third of the mid-90 percent range for crop disaster insurance.

A ratio below 100 percent indicates that insurers are operating at a profit.

However, industry insiders point out that flood and windstorm insurance differ from crop disaster insurance in both coverage and loss assessment methods, making direct comparisons inappropriate.

They note that flood and windstorm insurance can quantify damage to buildings and facilities, whereas crop disaster insurance must assess agricultural losses qualitatively. The scope of coverage also differs. Flood and windstorm insurance includes heavy rain and earthquake damage in its basic contract and offers various optional riders for additional protection.

In contrast, crop disaster insurance lists heavy rain as a separate rider, making its basic coverage relatively limited.

A commercial district in Gunsan, North Jeolla Province, floods after heavy rainfall, Sept. 7. Yonhap

Meanwhile, the Assembly’s Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee also decided to summon Samsung Fire & Marine Insurance CEO Lee Mun-hwa, DB Insurance CEO Jeong Jong-pyo, Hyundai Marine & Fire Insurance CEO Lee Sugh-hyun, Meritz Fire & Marine Insurance CEO Kim Joong-hyun, KB Insurance CEO Koo Bon-wook and Hanwha General Insurance CEO Na Chae-beom for its audit.

The decision follows accusations from Rep. Seo Sam-seok of the Democratic Party of Korea that residents of islands and remote areas face disadvantages compared with urban residents when purchasing vehicular insurance.

According to data from the Financial Services Commission, an analysis of policy terms from the five largest nonlife insurers found that residents in remote regions pay the same average premium of 690,000 won ($480) as city drivers but are ineligible for emergency roadside assistance in the event of a vehicle breakdown.

Seo pointed out that this discriminatory clause has remained unchanged for over 20 years since its introduction in 2001.

In response, the five major nonlife insurers are rushing to revise their policy terms to extend emergency roadside assistance to vehicles in island and mountainous regions, according to industry sources Monday.

Hanwha General Insurance plans to complete the revision within this year, while Samsung Fire & Marine aims for January next year. DB Insurance, KB Insurance and Hyundai Marine & Fire are targeting completion by September next year.