South Korean parliamentarians are expected to seek responses about high premiums for flood and windstorm insurance policies from some of the leading non-life insurers according to a report in The Korean Times.
According to the news report the law-makers’ queries will be a part of a major audit being conducted by the South Korean parliament. CEOs of five major non-life insurers have been invited for the audit.
It is understood that following the invitation by the parliamentarians the nonlife insurers are scrambling to bridge any gaps that may be existing in the covers being provided by them.
The report said while the insurance industry says that flood and windstorm insurance should not be compared directly with other public insurance programmes, lawmakers have always said that, like similar policies, government funds subsidise part of the premiums. They plan to press insurers on their justification for the high premium rates.
The lawmakers claim that insurers have been reaping excessive profits, citing the relatively low loss ratios compared with crop disaster insurance.
According to data provided, the average net loss ratio for seven insurers offering flood, windstorm and earthquake coverage between 2022 and 2024 was 32%, about one-third of the mid-90% range for crop disaster insurance. A ratio below 100% indicates that insurers are operating at a profit.
However, industry insiders point out that flood and windstorm insurance differ from crop disaster insurance in both coverage and loss assessment methods, making direct comparisons inappropriate.
They note that flood and windstorm insurance can quantify damage to buildings and facilities, whereas crop disaster insurance must assess agricultural losses qualitatively. The scope of coverage also differs. Flood and windstorm insurance includes heavy rain and earthquake damage in its basic contract and offers various optional riders for additional protection.