By Yoon Ja-young
With the fear about earthquakes increasing following tremors in Gyeongju, North Gyeongsang Province, consumers are turning their eyes to earthquake insurance.
Some insurers that had halted selling such policies after the earthquake resumed sales, Thursday, amid increasing criticism that they were shunning customers when they needed insurance most.
Local insurers said they have been getting hundreds of phone calls inquiring about earthquake insurance, following the 5.8-magnitude earthquake on Sept. 12. Some insurers including Dongbu, KB and Hanwha had been offering protection against earthquakes, but most of them had stopped selling it following the tremor. As the cessation led to consumer complaints, they agreed to resume selling the insurance, Thursday.
A spokesman for Dongbu Insurance explained that the company had stopped selling earthquake insurance because the country was still going through aftershocks.
“As the aftershocks were continuing, new subscriptions to earthquake insurance were meaningless. It would be like subscribing to car insurance while a car accident was ongoing. As the insurance companies are free from obligations in such cases, the new subscribers wouldn’t be able to receive compensation even if they sustained damage from the aftershocks. We had stopped selling it so as not to confuse consumers.”
Amid growing complaints that customers were being left without means of resort when insurance was most needed, however, Dongbu and the other insurers resumed selling it.
“We determined that aftershocks have entered the final stages and resumed selling policies. However, those in Gyeongju will have to go through additional procedures for subscriptions,” the spokesman said.
As earthquakes are not common in Korea, there haven’t been insurance products solely covering against them. It is generally provided as a rider on other insurance, such as fire or housing. In the case of Samsung Fire and Marine Insurance, the earthquake rider is available for those subscribing to fire, storm and flood, technology and package insurance policies. Subscribers to these policies can choose an earthquake rider, paying an additional insurance premium. The additional premium is usually only a small amount for general households. “Earthquakes have only recently become an issue in Korea. As the risk was low, the insurance premium was also low,” the Donbgu spokesman said.
He said that earthquake insurance is a common product in countries such as Japan. “There, private insurers cover a certain ratio of loss, and what goes beyond the level is covered by the government.”
Contrary to general belief, earthquake insurance premiums are low for apartments while they are higher for brick or wood houses in rural areas. This is because apartments are built with concrete and have earthquake-proof features. They are thus more likely to withstand tremors. “Insurers examine the plans of the building to see what it is made of and determine the insurance premium from that,” a spokeswoman for Samsung Fire and Marine Insurance said. It continued offering coverage against earthquakes, even after the tremor in Gyeongju.
She said the company has no plan to immediately raise the insurance premium. “This one incident that hit a certain region is not enough to raise the premium for all subscribers. We study accumulated data before raising premiums.”