South Korean authorities are preparing measures that would connect auto insurance and fuel card benefits to weekday driving restrictions, as the government responds to higher energy prices and uncertainty over energy supply linked to the Middle East crisis.
According to The Asia Business Daily’s report, industry sources said the Financial Services Commission (FSC) has opened talks with the non-life insurance sector on potential changes to automobile insurance arrangements that would reflect the government’s passenger car five-day operation system. At a March 27 meeting, the FSC met senior managers from non-life insurers and representatives of the General Insurance Association of Korea to discuss options that would account for reduced vehicle use under the weekday restriction scheme. The system limits passenger car operations on certain weekdays, typically based on licence plate numbers.
Proposals discussed included premium discounts structured around the official five-day driving restriction, as well as partial refunds for policyholders who keep their vehicles off the road on their designated no-drive days. The ideas would link policy conditions to a government mobility rule rather than to telematics or self-reported mileage alone. Participants said the talks remain exploratory and that there is no agreed design or timetable. Issues under review include how to confirm whether policyholders follow the restrictions, how long any programme should apply, and how to incorporate the changes into existing pricing, reserving and reporting practices.
The policy discussion is taking place while South Korean non-life insurers are dealing with pressure from motor business results. Market data indicate that automobile loss ratios have been above 80% in recent years, contributing to an estimated deficit of about 708 billion won in the latest full year. In response to continued losses, major non-life insurers raised auto premiums by a little more than 1% this year, marking their first increase in about five years.
Industry executives have signalled a readiness to participate in government-led measures intended to ease fuel-related costs for policyholders, while also noting the need to maintain capital strength and manage underwriting risk. Credit card companies, which have also been asked to participate in the response, report similar concerns as they weigh potential changes to fuel card offerings and other customer benefits.
On March 26, the FSC asked credit card issuers, via the Credit Finance Association, to review further fuel-related support. Proposals include increasing per-litre (ℓ) discounts on fuel cards and adding extra benefits when spending exceeds specified thresholds. Fuel cards in South Korea generally offer discounts of about 40 to 150 won per litre. Authorities have indicated that recent rises in retail fuel prices have reduced the effective discount rate per litre, limiting the impact of existing programmes on fuel expenses for households and businesses.
Details of any strengthened fuel card measures – including caps, eligibility rules, and settlement approaches with fuel retailers – have not yet been determined. Card issuers are analysing potential effects on profitability, customer usage patterns, and product design. The FSC has said it intends to announce a broader set of public welfare measures involving insurers, credit card issuers, large financial groups, and other institutions as part of the government’s response to the Middle East situation.
Alongside these financial-sector discussions, South Korea is tightening mobility rules for the public sector while raising its resource security crisis alert. According to Reuters, the Ministry of Trade, Industry, and Energy has said the national energy security alert will shift to a “warning” level from April 2, up from earlier “caution” and “concern” stages introduced in March. From April 8, an odd-even licence plate rule will apply to public-sector vehicles at around 11,000 institutions, replacing a previous rotation system introduced in late March.
A separate five-day licence plate rotation will apply to roughly 30,000 publicly operated car parks, limiting which vehicles can enter on given weekdays. Private sector participation in these measures remains voluntary. The ministry has urged public organisations to adjust commuting through flexible working hours, reduce non-essential business travel, and make greater use of video conferencing. Finance Minister Koo Yun-cheol has said the government could extend driving restrictions to the wider public if crude oil prices rise to around $120 to $130 a barrel, which would be the first nationwide driving curb in South Korea since the 1991 Gulf War. The evolving framework in South Korea is being followed as one example of how mobility policies, insurance products, and payment arrangements may be adjusted in response to a prolonged period of higher energy prices and supply risk.
