By Kim Jae-won
Owners of Hyundai Motor’s Equus, Mercedes-Benz’s S class and BMW 7 series models will start paying up to 15 percent higher insurance premiums in April, as the financial regulator will impose special fees on expensive cars.
The Financial Services Commission (FSC) said Wednesday that it will mandate insurance firms to charge 3 to 15 percent more in insurance premiums for automobiles whose repair costs exceed 120 percent of those of an average vehicle.
This means that a 43-year-old owner of a 2013 Mercedes-Benz S350 will pay 1.14 million won for his insurance premiums per year, up 150,000 won from 990,000 won. Under the same new regulations, a BMW 520D owner will be charged 777,000 won, up 101,000 won from 676,000 won.
Forty-six models, including Hyundai’s Equus Limousine and the BMW 7 series, are classified at the top level with a 15 percent additional charge. Other imported models, such as Toyota’s Camry and Volkswagen’s Passat, are also included in the list.
“Expensive cars are causing high costs in the auto insurance market. We aim to improve this structure with the new regulations,” said Lee Dong-hoon, a director at the FSC, in a briefing.
The announcement came amid strong criticism of owners of expensive, imported cars for running up high repair costs, causing insurance bills of those at fault to go up. The regulator said it will help prevent such cases by prohibiting car owners from demanding the replacement of parts damaged in trivial accidents.
The regulator said it will also change regulations for rental services because they are another major cause of high repair costs in accidents. Starting as early as March, car owners will only be able to demand a rental car of the same class and year as their own. This means that an owner of a BMW 502d 1995CC may be provided with a car from any manufacturer as long as it has a similar engine displacement, the FSC said.
The regulator said that the new rules will help reduce the burden of auto insurance companies which have suffered operating losses for the last few years. According to the FSC, the combined operating losses of auto insurers reached 1.1 trillion won last year, up from 900 billion won a year ago. It clocked in at 600 billion won in 2012 and 500 billion won in 2011.