Imports’ repairs plague insurers

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Imports’ repairs plague insurers


The government is considering a ceiling on compensation when a Korean car crashes into a luxury import because insurers are complaining about the amounts they have to pay owners of expensive imported cars.

The government is also discussing ways insurers can save money by making imported car owners use cheaper local rental cars when their luxury models are being repaired.

Currently, in the case of an accident involving an imported car, Korean insurers must pay for the rental of the same model for the owner to use while the car is being repaired.

Rentals of foreign cars are much more expensive than of locally made cars.

According to the financial industry Wednesday, high-level officials of the Financial Services Commission, Financial Supervisory Service, General Insurance Association of Korea and Korea Insurance Development Institute recently met to prepare measures to find ways to reduce the excessive costs for local insurers.

Spending on accident cases involving imported cars by insurance companies has risen as the number of imported cars in Korea grows steadily.

According to statistics from the Korea Insurance Development Institute, the insurers spent a total of 1.1 trillion won ($994 billion) last year paying for repairs after their customers had accidents with imported cars.

This was the first time the figure surpassed the 1 trillion won mark, and accounted for about 21 percent of the insurers’ total spending on repairs.

And yet last year, imported cars only accounted for 6.7 percent of all vehicles registered with insurance in Korea.

Repairs for an imported car averaged 2.74 million won, nearly triple the amount for Korean-made cars, which averaged 950,000 won.

Also, the insurers had to spend an average of 1.37 million won to rent an imported car for use during the repairs, also triple the amount they spend on Korean cars (390,000 won).

As Korean law allows accident victims to be compensated in cash, cash payments are also a problem for insurers.

Last year, imported car owners requested cash compensation that averaged 2.4 million won.

This was nearly four times larger than the cash compensation average for a domestic car, which was 617,000 won.

In March, a Lamborghini owner in Geoje, South Gyeongsang, faked a crash and charged almost 100 million won to a local insurance company.

Various solutions were pitched at the recent meeting among finance authorities and the insurers associations.

They said that there should be a limit on the damages.

They also discussed allowing the insurers rent out cars of the same size or engine displacement as the damaged imported car, which would allow the companies to choose local auto models.

Some argued that repair standards should be written in detail in order to prevent import car owners from overcharging insurers. Some even called for the raising of insurance premiums for imported car owners.

However, some attendees said such solutions were unrealistic because the imported car industry may express opposition, and so may owners of imported cars, the ranks of which are growing every year.

In the end, the finance authorities and insurance industry groups decided to offer discounts on car insurance installments or provide partial refunds of insurance fees to those imported car owners who choose to repair their cars with locally produced auto parts.

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