Korea Insurance

Regulation

The Korean insurance industry is controlled by Financial Supervisory Service (FSS), which was officially established on January 2, 1999, as a special corporation with no capital. The FSS controls all matters relating to insurance in Korea.

Non-admitted insurance is strictly prohibited by local regulation. However, cross border insurance is permitted for Marine Cargo, Hull, Aviation and Overseas Travel Accident only.

Korea is a highly regulated tariff market. However, global terms & conditions in accordance with a global master program is applicable for multinational companies.

Insurance Market Overview

Korea's insurance market ranked seventh largest in the world in 2007. The nation posted US$117.7 billion in gross written premiums in 2007. In 2007 premium income in:

• non-life insurance increased 12.4% to US$35 billion , the eleventh biggest worldwide in the world
• life insurance hit US$813 billion, the seventh largest in the world in 2007
• the insurance density is US$2,384, the 21st in the world
• the ratio of the insurance market to GDP in Korea (so called, insurance penetration ratio) is 11.8% in 2007, the 5th in the world.

Reinsurance Requirement

Some 12 reinsurance companies including 11 international reinsurers and one local company, Korean Re, run businesses in Korea. The remarkable thing is even though there is no compulsory reinsurance requirement to Korean Re, there is a market agreement that empowers Korean Re to provide quotes with sole authority. Regarding this, most contracts should be reinsured by Korean Re first if the local capacity is not exhausted.

The exception is premium can be exported for multinational companies not limited with global master program outside of Korea. In this case, package policies, local multi-lines policies with property, business interruption and liability policies in Korea, should be used. This means the premium of mono line policy can not be exported.

Compulsory Insurance in Korea

Workers Compensation Insurance

• Minimum protection in accordance with Workmen's Accident Compensation Insurance Act is compulsory under the government scheme.
• Employer's Liability (voluntary) provides the excess coverage of Workers Compensation.

Gas Accident Liability Insurance

• Compulsory insurance for gas producers, sellers and users and so forth.
• The limits
  

  - Bodily Injury: KRW 80 million

  - Property Damage: KRW 100 million - 10 billion

• General Liability (voluntary) provides the excess coverage of compulsory gas liability insurance.

Compulsory Auto Bodily Injury Liability Insurance

• Limits
  

  - Death and first grade permanent disablement: KRW 100 million

  - Medical expenses: KRW 20 million

  - Property damage : above KRW 10 million

• Voluntary auto insurance provides the excess coverage

Building Owner's Bodily Injury Liability Insurance

• Coverage for building owner's liability against third party/visitors, those injured by the fire
• Limits
  

  - Death and 1st Grade Permanent disablement: KRW80 million

  - Medical expenses: KRW20 million

eBiz Liability Insurance

• Internet service companies should purchase eBiz Liability Insurance in accordance with 'Customer Insurance Law of Commercial Internet Trade'.
• This insurance covers legal liability of companies running internet shopping malls, internet finance sites, or other internet service sites.

Physical Training Facility Liability Insurance

• This insurance covers legal liability to third party arising out of ownership, maintenance and/or use of the insured's premises(Ski Resort, Golf Resort, Swimming Pool or Comprehensive Physical Training Facility etc.) and operations.