General Insurance Association of Korea moves to tackle it
The General Insurance Association of Korea prepares measure to lead car importers in Korea to cut the excessively high repair costs they impose on their customers.
Still, many in the industry are rather negative about the effectiveness of the measures because the association has no division to take charge of the negotiations with the importers, to say nothing of the basic statistical data such as the costs of their auto parts. In fact, the special task force to deal with the issue has been set up just recently. Even the association is admitting the lack of such resources, looking forward to the government’s intervention in the matter.
As of the end of last year, approximately 750,000 new vehicles were registered in Korea, imported cars accounting for some 10% of the total. During the same period, the number of insured events involved with imported cars increased rapidly from 200,000 to 250,000 or so.
The Ministry of Land, Transport and Maritime Affairs has its own guidelines with regard to the repair and auto parts costs related to domestically manufactured cars. However, there are no such guidelines covering imported vehicles for now with the average repair and parts costs reaching 3.5 times and 5.3 times when compared to those applied to domestic cars.
Up to these days, the Korean government has failed to respond properly to the situation due to concerns over potential trade disputes and car importers have taken advantage of this not to provide related business data, deteriorating the loss ratio on the part of insurers in Korea.
“The issue can’t be deal with by the insurance industry alone and the government should step in immediately to protect local consumers,” said the task force, adding, “Although no silver bullet is in sight yet, it is fortunate that the government has begun to show some interest in the matter as of late.”