Typical Driver Pays $360 Yearly Insurance

The average Korean driver is 35 years old, has been driving for three years, owns a car with a 1.5-liter engine and has auto insurance with coverage limited to his family, according to a report released by the Financial Supervisory Service on the changes drivers can expect the planned auto insurance liberalization to bring.

That average driver pays 470,000 won ($360) annually for his auto insurance, but could cut it to 453,000 if he switches to a new policy after the supervisory agency deregulates insurance premiums next month. If the driver's insurance covers anyone in his car he could save more - about 134,420 won per year.

Auto insurance agencies are set to cut premiums once the changes take effect. Eleven agencies have already said they plan to cut premiums by an average of 2 or 3 percent, the financial regulator said.

First-time applicants are expected to benefit most from the change, as their rates should drop by about 10 percent. Drivers of cars with engines that are either smaller than 1 liter or bigger than 2.1 liters can expect comparable savings.

The 26 to 47 age group will benefit more than any other, the regulator said. So a 26-year-old driving a subcompact could save about 14 percent.

The deregulation will not affect existing policies, so drivers may find it in their interest to cancel their contracts and sign new ones, the regulator said.

The regulated insurance market made it easy to shop for policies, as agencies offered similar products at identical rates. But liberalization means they will use differing premium-determination methods, which will make comparisons trickier.

Accordingly, rates are expected to vary widely between insurance agencies. The supervisory body said that yearly rates for a new applicant with a midsize car could differ by as much as 1 million won.

But not all categories of drivers will benefit: Groups that could be hit with rate hikes upwards of 30 percent include young sports car drivers and drivers aged 50 and up whose insurance covers their children.

The regulator advised drivers whose policies are about to expire or who can expect to save big by switching policies to begin calling agencies and comparing quotes. It also said drivers should closely check the extent of coverage, the agencies' ability to make payouts and the availability of supplementary services such as towing. The regulator will post information on estimated changes in premiums depending on types of vehicles and drivers' ages on its home page (www.fss.or.kr).

by Chung Sun-gu