South Korea’s National Assembly is preparing to question senior executives from leading non-life insurers regarding the pricing of flood and windstorm insurance.
The parliamentary audit, scheduled for Tuesday, will bring together the CEOs of DB Insurance, KB Insurance, and NH NongHyup Property & Casualty Insurance. These companies hold a significant share of the disaster insurance market.
The focus of the inquiry is on the justification for current premium levels, particularly as government subsidies partially offset the cost of these policies.
According to a report by The Korea Times, lawmakers – including Reps. Suh Bum-soo and Park Duk-hyum from the main opposition People Power Party – have indicated they will seek detailed explanations from the insurers about their pricing models and the factors influencing premium rates.
Central to the discussion is the profitability of flood and windstorm insurance compared to other government-supported insurance programs, such as crop disaster insurance.
Data presented by lawmakers shows that, between 2022 and 2024, the average net loss ratio for seven insurers providing flood, windstorm, and earthquake coverage was 32%. This figure is considerably lower than the loss ratios for crop disaster insurance, which typically range in the mid-90% area. A loss ratio below 100% generally means the insurer is operating profitably.
Industry representatives have responded by emphasising differences in how these insurance products are structured and claims are assessed.
Flood and windstorm insurance, they note, is designed to quantify physical damage to property and facilities, while crop disaster insurance often requires qualitative assessment of agricultural losses.
The scope of coverage also varies. Flood and windstorm insurance policies commonly include heavy rain and earthquake damage as standard, with optional riders for additional risks. By contrast, crop disaster insurance treats heavy rain as an add-on, resulting in a narrower base policy.
In a related development, the National Assembly’s Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee has called on the CEOs of the country’s largest non-life insurers to address concerns about emergency roadside assistance.
Rep. Seo Sam-seok of the Democratic Party of Korea has highlighted that residents in remote and island regions pay the same average premium for motor insurance as those in cities, but are excluded from emergency roadside support. This exclusion has been in place since 2001.
In response, major insurers are moving to revise their policy terms to extend roadside assistance to vehicles in remote areas.
Hanwha General Insurance expects to implement the changes by year-end, Samsung Fire & Marine Insurance is targeting January of the following year, and DB Insurance, KB Insurance, and Hyundai Marine & Fire Insurance are aiming for completion by September next year.
The audit coincides with the introduction of South Korea’s first index-based weather insurance product, targeting small businesses.
KB Sonbo Insurance Co., Ltd. will launch the product this month, offering payouts based on specific weather events such as heavy rainfall, heatwaves, or cold spells, rather than requiring proof of physical damage.
For example, if daily rainfall exceeds 80mm, policyholders can receive up to 50,000 won per day, with smaller payouts for lesser rainfall. The product also covers temperature extremes, with payout thresholds adjusted for regional climate differences.
Policyholders can select coverage levels that match their risk exposure, and premiums are set accordingly.
The claims process for this new insurance is designed to be expedited, with payouts processed in as little as three to five days, compared to the typical two-week wait for traditional policies.
This approach aims to provide faster financial relief to businesses affected by adverse weather, reflecting a shift in how insurance products are structured and delivered in the South Korean market.
