The trend of pet ownership in South Korea has surged to new heights, with a quarter of all households now boasting furry friends. (Image courtesy of Yonhap)
SEOUL, Mar. 7 (Korea Bizwire) – The trend of pet ownership in South Korea has surged to new heights, with a quarter of all households now boasting furry friends.
This boom in pet adoption has had a remarkable ripple effect on the pet insurance industry, witnessing a substantial 50% increase in policies over the past year.
As families continue to embrace pets as part of their lives, the demand for pet insurance has skyrocketed, with ten major insurance companies reporting a combined total of 109,088 insurance contracts by the end of last year.
This marks a 51.7% increase from the previous year’s 71,896 contracts, with new contracts for pet insurance alone jumping by 66.4% to 58,456.
Despite these impressive figures, the penetration rate of pet insurance remains low at 1.4%, considering an estimated pet population of 7.99 million.
This is a slight increase from previous years, reflecting a gradual yet steady growth in the uptake of pet insurance among South Korea’s 6.02 million pet-owning households.
Industry insiders point to the absence of a robust regulatory framework and systemic support as barriers preventing explosive growth in the pet insurance market.
The current pet insurance adoption rate in South Korea significantly lags behind countries like the U.K., where 25% of pets are insured, and Japan, with a 12.5% insurance rate.
The cost of veterinary care, which constitutes about 40% of the average monthly pet maintenance expense of 150,000 won, is a significant concern for pet owners, with 83% feeling the financial strain, according to a survey conducted by the Korea Consumer Agency.
Industry insiders point to the absence of a robust regulatory framework and systemic support as barriers preventing explosive growth in the pet insurance market. (Image courtesy of Yonhap)
Variations in veterinary fees, which can differ by as much as seven to eight times from one clinic to another, exacerbate this issue.
The insurance industry has cited the lack of standardized veterinary treatment codes and mandatory medical record issuance as key challenges in developing pet insurance products.This has made it difficult to accurately calculate premiums and manage loss ratios.
There is a pressing need for legislative changes, particularly the amendment of the Veterinarians Act to mandate the issuance of medical records by veterinary clinics, which could help prevent overtreatment of pets and insurance fraud.
It would also facilitate the development of more tailored insurance products based on factors like the pet’s age and breed.
Despite the introduction of seven legislative proposals aimed at mandating the issuance of veterinary medical records, these remain pending in the National Assembly’s Agriculture, Forestry, Livestock, and Fisheries Committee. Given the legislative schedule ahead of the general election, the industry remains skeptical about the prospects of these bills being passed.
The Financial Services Commission is looking to invigorate the pet insurance market by amending regulations to allow for the sale of both short-term (up to one year) and long-term (three to five years) insurance products not just at veterinary clinics but also at pet shops, with implementation expected in the near future.
M. H. Lee (mhlee@koreabizwire.com)
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