South Korea auto insurance rules
As per laws of South Korea auto insurance industry, it is necessary for every car, which has an engine displacement size of at least 50 cc. Mopeds and vehicles, which are lesser than 50 cc are not liable to be insured as per auto insurance laws of South Korea. These rules also apply for foreigners living there.
As per South Korea auto insurance rules, auto insurance policies are provided for one year periods. They are renewed at a date, which is corresponding to inspection date of that particular vehicle. In case a car is sold, Compulsory Auto Liability Insurance of that car is transferred automatically for a fortnight to its new owner.
New car owners in South Korea are advised to buy auto insurance policies other than Compulsory Auto Liability Insurance as there are plenty of auto insurance policies that provide unlimited coverage for physical injuries sustained by insured. In South Korea only accredited auto insurance companies deal in auto insurance policies.
Importance of South Korea auto insurance industry
South Korea auto insurance industry has always been an important part of its overall insurance business. Number of premiums written in South Korea automobile insurance industry has grown at a rate of more than 18 percent since 1983 when monopolized South Korean insurance market was made accessible to liability and property insurance companies.
There are certain important factors behind this quick rise of automobile insurance industry of South Korea like sudden increase in use of cars in South Korea and mandatory automobile liability insurance policies. In 2005 auto insurance industry in South Korea amounted for 35.2 percent of direct premiums.
South Korea auto insurance has not been a profitable industry after financial restructuring of 1983. There has been only two times when it has made profits in underwriting – in 1997 and 1998. Losses in underwriting have normally been offset, either totally or in part, by profits made in investments. However, this has been a chronic problem.
Much of this situation could be blamed on strictures of governmental regulations in South Korea. There have been demands for changes and some alterations have been effected as well. For instance premiums have been increased. However, these changes have not proved to be entirely fruitful.
Details of South Korea auto insurance market
Majority of insurance companies in South Korea deal in auto insurance. There are four auto insurance companies in South Korea that generate estimated yearly premiums worth a trillion won. Turnover of rest is lesser than a trillion won. These companies amount for an estimated 70 percent of South Korea auto insurance market.