Cars abandoned by motorists amid heavy downpours and ensuing flash floods sit unattended on a road near Daechi Station in southern Seoul on Aug. 9, 2022. (Yonhap)
SEOUL, June 8 (Korea Bizwire) — South Korea’s financial regulator said Wednesday it will enhance the car insurance premium system to prevent the transfer of high repair costs from expensive at-fault vehicles to owners of less expensive victim vehicles through increased insurance premiums.
In cases of traffic accidents involving expensive vehicles, which have an average new car price exceeding 80 million won (US$61,200) and repair costs more than 120 percent higher than the average, insurance premiums for less expensive vehicles have risen, regardless of fault rate being less than 50 percent.
This places the burden of compensating for the high repair costs of expensive vehicles on the owners of less expensive ones.
It has been noted that it is unfair for insurance premiums of expensive vehicles to remain unchanged even when they are at fault in accidents, solely due to the low amount of compensation involved.
To address this issue, the Financial Supervisory Service (FSS) has decided to implement improvements to the system starting next month.
The changes will involve increasing insurance premiums for expensive at-fault vehicles with high repair costs, while suspending premium increases for less expensive victim vehicles.
The new system will be applicable in cases where both the drivers of expensive and less expensive vehicles share partial fault in the accident.
For the system to be applicable, the compensation paid by the owner of the less expensive vehicle must exceed three times the amount paid by the owner of the expensive vehicle, and the compensation amount paid by the owner of the less expensive vehicle should be more than 2 million won.
To achieve this, the FSS plans to introduce new scores in addition to the existing accident scores in the calculation of insurance premiums.
Last year, there were over 50,000 traffic accidents involving expensive vehicles, an increase from 36,000 in 2018.
The average per-repair costs for these vehicles were estimated at 4.1 million won, which is 3.2 times higher than that of general vehicles.
J. S. Shin (js_shin@koreabizwire.com)
