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S. Korea’s Insurance Market for Migrant Workers Doubles Within 10 Years
Samsung Fire Is the Sole Insurer for Migrant Workers
S. Korea’s Insurance Market for Migrant Workers Doubles Within 10 Years
  • By Yoon Young-sil
  • March 26, 2019, 09:33
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The insurance market for migrant workers in South Korea has doubled in less than 10 years.

The size of the insurance market for migrant workers in South Korea has doubled in less than 10 years. The current law requires foreign employees who reside in the country and the employers who hire them to take out the insurance policies exclusively designed for foreign workers.

The amount of annual insurance payments by migrant workers and their employers increased from 225.70 billion won (US$199.03 million) in 2011 to 396.46 billion won (US$349.61 million) in 2018, according to Samsung Fire& Marine Insurance Co. on March 25. There are four types of migrant workers insurances – departure guarantee insurance and guarantee insurance which guarantee wages and severance pay to be paid to foreign employees by employers, personal injury insurance which guarantees foreign workers’ non-business risk of injuries during a work period, and return cost insurance which covers expenses for going back to their home countries.

Under the current act on the employment of foreign workers, all employers and foreign workers, especially those who has a E9 or H2 visa, are obliged to be insured. Violators would be punished by a fine of up to 5 million won (US$4,400).
 

As the number of migrant workers in South Korea is on the rise and the government is tightening the enforcement of the relevant regulations, the number of migrant workers insurance policy holders and the amount insured is growing as well. The number of foreign employees who took out a departure guarantee insurance stood at 240,907 as of last year. The departure guarantee insurance had the most number of subscribers among departure guarantee insurance, guarantee insurance, personal injury insurance and return cost insurance. Currently, the number of migrant workers insurance policy holders came to 243,723 as of the end of last year, which was 99 percent of the total. The figure grew about 100,000 compared to 2011. The amount of foreign employees’ departure guarantee insurance fees totaled 364 billion won (US$320.99 million) as of last year, which accounted for 92 percent of the total.

However, it is hard for insurance companies to expect a profit. A number of insurance companies have started operating products in a consortium form with the introduction of mandatory migrant workers insurances in 2006 but Samsung Fire is practically the only one operating the products with a 95 percent share now due to the profit issue. Samsung Fire runs a departure guarantee insurance, personal injury insurance and return cost insurance, while Seoul Guarantee Insurance Co. operates a guarantee insurance.

This is why some raise doubts on if there is a problem with the process of competitive open bid which is conducted by the Ministry of Employment and Labor and the Human Resources Development Service of Korea once every two years. However, there is no additional insurer who wants to jump into the market. An official from Samsung Fire said, “We have added more services, such as an official website for employers and a mobile application which supports 16 languages for foreign workers at the end of last year in order to enhance convenience.”