Korea

Principal Legislation

• Insurance Business Act, enacted January 1962, with major revisions in 1977, 2003, 2011, and 2023 enhancing consumer protection and digital insurance frameworks.
• Medical Care Act, originally from December 1963, revised in 1997 and 2019 to expand coverage and regulate private health insurers.
• National Pension Act of 1986, updated regularly for demographic changes and pension sustainability.
• National Health Insurance Act of 1999, with ongoing reforms to improve universal coverage and cost efficiency.
• Employee Retirement Security Act, established December 2004, amended in 2022 to improve pension fund governance.

Supervision

Two regulators oversee insurance: the Financial Services Commission (FSC), responsible for public policy, legislation, licensing, and regulatory frameworks; and the Financial Supervisory Service (FSS), handling financial supervision, product approval, and dispute arbitration. Both coordinate on innovation and ESG insurance products.

Admitted/Non-Admitted

No legal restrictions on placing business with non-admitted reinsurers. Foreign reinsurers do not need to post deposits or collateral. No withholding taxes or deductions on reinsurance premiums ceded abroad.

Compulsory Classes

• Compulsory automobile liability (CALI)
• Third-party liability for gas accidents
• Third-party liability for sports centres, recreational facilities, and gymnasia
• Third-party liability for schools, children’s play areas, and kindergartens
• Third-party liability for pleasure craft
• Road hauliers’ liability
• Household removers’ liability
• Third-party liability for space launches and satellites
• Nuclear liability
• Marine pollution liability
• Fire and liability for third-party bodily injury caused by fire for buildings above 15 storeys, places of public entertainment, and other publicly accessible buildings
• Third-party liability for spread of fire in multi-tenure buildings
• Product liability for “hybrid” manufacturers
• Workers’ compensation (state scheme)
• Personal accident insurance for students and part-time assistants working in university laboratories
• Foreign workers’ guarantee insurance for unpaid wages
• Foreign workers’ return cost insurance
• Foreign workers’ non-work-related accident insurance
• Professional indemnity for foreign insurance brokers and agencies engaged in cross-border sales
• Security for insurance brokers (cash deposit, bond, or professional indemnity insurance)

State Involvement

The Korea Export Insurance Corporation (KEIC) is the sole state-owned insurer, providing export credit and trade-related insurance.

Tariff Classes

No statutory tariff classes apply in South Korea.

Premium Taxes and Charges

Insurers pay a stamp duty of KRW 100 per policy document issued.

Policy Language

Mass-market policies issue in Korean; commercial policies frequently issue in English.

The Korean non-life direct market comprises 10 domestic multiline insurers, three direct motor writers, two state-owned credit insurers, and eight foreign branches or subsidiaries. Insurance is also underwritten by the Post Office and approximately 70 co-operatives, primarily active in the agriculture, fishing, and small business sectors.

Korea’s reinsurance market comprises the listed national reinsurer, Korean Re, and seven foreign branches. Despite the liberalisation of the reinsurance market in 1997, Korean Re maintains a dominant position, writing approximately 87.8% of inward reinsurance premiums in 2022. It leads in providing proportional capacity and plays a crucial role in developing and rating new casualty insurance classes. Korean Re is also the leading life reinsurer, with a smaller market share compared to non-life.

Insurance distribution is primarily handled by agents, solicitors, and insurance companies’ in-house sales departments. In the life insurance market, sales have traditionally been dominated by direct sales forces, known as “solicitors,” who work on commission for a single life insurer and are typically self-employed rather than company employees. Digital platforms and bancassurance channels have grown steadily, complementing traditional distribution methods but not yet replacing them.

Korea has a generally low exposure to earthquakes. Its earthquake risk stems from proximity to the circum-Pacific earthquake belt passing through neighbouring Japan. Typhoons and related flooding are the most significant natural hazards, with the southern and southeastern parts of the peninsula most vulnerable. Increasingly severe typhoons linked to climate change have heightened flood risks, prompting improvements in early warning systems and infrastructure resilience.