SEOUL, Sept. 22 (Korea Bizwire) – Amid concerns over last week’s historic earthquake and the hundreds of aftershocks that have followed, some insurance companies have ceased to offer earthquake insurance products.
A record magnitude-5.8 earthquake struck the peninsula on September 12 with its epicenter some eight kilometers south of Gyeongju. Since the original temblor, some 423 aftershocks have been felt, including Monday’s magnitude-4.5 quake, as of 6 a.m. Thursday.
Dongbu Insurance was among the first to stop allowing earthquake riders in its fire insurance products. As a special provision added to Dongbu’s fire insurance products, the rider would cover damage from earthquakes.
But according to a company official, the company only temporarily stopped its earthquake insurance over concerns related to adverse selection, and to prevent future disputes.
“Because the policy terms view aftershocks as part of the main earthquake event, those signing up for the product now will not be recompensed (for damages from aftershocks). And this creates room for potential complaints and disputes among customers that aren’t aware of the fact.”
Other insurance companies, including KB Insurance and Hanwha General Insurance, have also put a stop to earthquake coverage inclusion in their fire insurance products.
As of Thursday morning, Hyundai Marine & Fire Insurance and Samsung Fire & Marine Insurance were the only two among 12 property insurance companies that still offered earthquake coverage.
Despite the insurance industry’s unified justification for changing their policies – to prevent confusion and disputes over damages from aftershocks – halting the sales of earthquake-related products when tension is at its highest has brought about criticism on the part of consumers.
According to experts, the fact that companies have dropped earthquake coverage is also an implication that they will refuse compensation for damages from aftershocks, which is expected to raise conflict even with previously-registered customers.
By Joseph Shin (email@example.com)