South Korea opens consultation on short-term insurance policies

Revisions include a $1.8m minimum capital requirement for insurers offering such plans.

South Korea’s Financial Services Commission is conducting a consultation regarding revisions to the requirements for establishing insurance firms centred on short-term, small-amount policies until 17 March.

The proposed revisions include setting a $1.8m (KRW2b) minimum capital requirement for firms offering short-term and low-cost policies, with such policies allowed in all applicable coverage areas with a one-year coverage term. Premiums should be up to $45,000 (KRW50m) and the insurers’ annual gross premium reserves should be up to $45m (KRW50b).

Insurance businesses with total assets of $900m (KRW1t) or more must have external actuaries approve the appropriateness of their policy reserves. This will also apply to insurers with less than the said amount in total assets but whose policy coverage types are considered as essential for them to ensure payout capabilities.

The actuaries will have the right to request relevant information from insurers, and external reviews from the same institution will not be allowed for four consecutive years.