Auto insurers offering discounts
Published: 07 Jun. 2016, 20:35
Car owners can get as much as 50 percent off their annual automobile insurance payments when adding all of the discount criteria including installing so-called black boxes, which are recording video devices, and for never having been in an accident.
Nationwide, insurers are increasingly offering policies that incorporate discounts based on data analysis.
Hyundai Marine and Fire Insurance is offering an automobile insurance policy that provides a 7 percent additional discount when the vehicle owner has children aged 6 or younger. This policy was based on a study that shows that drivers with young children tend to drive safer.
KB Insurance offers an additional discount to those who frequently use public transportation. If a subscriber has spent 150,000 won ($129) on subways and bus fares in the past three months he can get as much as a 10 percent discount. If the driver has spent between 120,000 and 150,000 won on public transportation, he gets a 4 percent discount.
Dongbu Insurance offers an insurance policy that’s based on mileage. Drivers get as much as a 5 percent discount on their insurance payments when they get more than 61 points for driving safely for more than 500 kilometers or about 311 miles. Points are given through a smartphone app.
Some insurance companies, such as Meritz, have stepped up their existing mileage discounts. The company previously offered 23.2 percent discounts for drivers who travel 3,000 kilometers a year or less. That discount has risen to 31 percent.
Next month, Hanwha will raise discounts for drivers that travel 2,000 kilometers or less a year to 35 percent, the industry’s highest discount. “We have decided to raise the discount rate significantly on drivers that barely travel much in their cars as the insurance payment that goes out to the customers compared to the payments that the customers make is low,’ said Kim Young-joon, head of the automotive insurance department at Hanwha General Insurance.
From the second half of last year until earlier this year, insurers competed against each other by raising auto insurance premiums by 2.5 percent to 5.9 percent for individuals.
This is because the payments that these insurers were handing out were more than the premiums they were receiving. Insurance companies have shifted strategy, however, to attract drivers with excellent safety records.
“Roughly 80 percent of the drivers that subscribe to automobile insurance don’t request for insurance coverage throughout an entire year because they don’t get into car accidents,” said an official at Dongbu Insurance, who requested anonymity. “In order to reduce the losses the insurance companies have to attract such customers.”
The other reason insurance companies are aggressively employing discounts is because of heating competition in the online insurance market.
Until recently, the only insurance company offering auto policies online was Samsung Fire and Marine. Others sold them through telemarketers. This year, seven companies have started selling automobile policies online.
The General Insurance Association of Korea and the Korea Life Insurance Association last month retooled its joint insurance site (www.e-insmarket.or.kr) to allow customers to easily find an auto insurance policy.
“The website was upgraded so that the customers can compare different products by including their past accident history and personal driving habits,” said an official at the General Insurance Association. “We expect this upgrade will increase the number of customers subscribing to automobile insurance online.”
As much as these discounts might sound tempting, industry insiders say they need to make sure a high discount is enough to offset the cost of an expensive policy. For example, the owner of a BMW 520d might be charged 691,000 won yearly for a KB Insurance policy, even when adding a 10 percent discount for public transportation use. However, Samsung offers a cheaper insurance policy of 660,000 won, even without 10 percent off.
“The discount competition is a positive trend but it could also be looked upon as bait” by insurance companies, said Cho Yeon-haeng, head of the Korea Finance Consumer Federation. “Customers need to check every detail on the actual benefits that they can get before subscribing to the product.”
BY HAN AE-RAN [lee.hojeong@joongang.co.kr]
with the Korea JoongAng Daily
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