Insurance Market Domination

The South Korean marine insurance market is currently US$150 million to US$170 million in size and the share of the IG Club is as high as 80% in the market.
The South Korean marine insurance market is currently US$150 million to US$170 million in size and the share of the IG Club is as high as 80% in the market.

 

According to the Korea Shipowners’ Mutual Protection & Indemnity Association (Korea P&I Club), the South Korean marine insurance market is currently US$150 million to US$170 million in size and the share of the IG Club, a global group of hull insurers, is as high as 80% in the market with the Korea P&I Club, which is the only South Korean hull insurer, behind it.

This can be attributed to a business practice. South Korean law firms have written the IG Club as an insurer into their ship finance contracts for long. In this regard, the Korea Shipowners’ Association recently asked the local ocean shipping industry and major local law firms to include the Korea P&I Club in their ship finance contracts. The club is made up of multinational members from Britain, Norway, Sweden, etc. Japan, which joined it in 1985, is the only Asian member in it.

The Korea P&I Club was established in 2000. As of now, this club has 220 shipping companies running 1,100 ships as its members. According to the club, South Korea has had to pay US$150 million abroad each year due to the practice and this outflow of money can be blocked once it is included in cargo transport contracts, charter contracts, ship finance contracts, etc.

The Ministry of Oceans & Fisheries of South Korea is rather skeptical though. “The Korea P&I Club is still small in size and cannot cover large-scale accidents involving supertankers and the like,” it explained, adding, “The biggest problem is that its emergency fund is insufficient.” The South Korean government put 8.5 billion won as its emergency fund and the amount can be increased only after the Ministry of Strategy & Finance gives its consent.

 

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution