South Korea's financial watchdog has never examined whether the costs that non-life insurers passed on to customers were appropriate during the past six years of auto insurance rate changes. Because auto insurance is mandatory and includes liability coverage, critics say supervisors should be scrutinizing whether those costs are justified.
Of 83 auto insurance rate changes made between January 2021 and August 2026 by the five largest non-life insurers — Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, DB Insurance and Hanwha General Insurance, including Carrot General Insurance — the Financial Supervisory Service reviewed only six after the fact, or 7.2%, according to the office of Rep. Lee Kang-il of the Democratic Party of Korea, a member of the National Assembly's National Policy Committee, on the 22nd.
Officials inside and outside the government say the volume of after-the-fact reviews is itself inadequate. By year, there was one review in 2022 and five last year — that was all.
The bigger problem is that the FSS has never once verified what it calls the appropriateness of cost attribution — whether policyholders should be bearing a given cost at all.
Insurers answered "none" to every question asking whether they had newly factored in costs that had not previously been included when revising rates. But there is no process for the regulator to properly verify those answers. Analysts say that even if insurers raise premiums over an issue affecting only some policyholders and shift the burden onto the entire pool, consumers would have no way of knowing.
Financial authorities abolished the pre-filing requirement for insurance products in 2015 to give companies more freedom in product development, and since then have collected underlying documents and conducted after-the-fact audits only when necessary, such as to prevent consumer harm. Even those reviews mostly amount to checking for terms that disadvantage policyholders. The regulator has recommended revisiting payout standards or coverage ceilings, but has never demanded that rates be recalculated or imposed sanctions. Since pre-filing was eliminated in 2016, the FSS has sanctioned insurers over net premium rates through after-the-fact measures in only two cases — management warnings issued to Hanwha General Insurance and Samsung Fire & Marine Insurance in 2016.
The five insurers' annual rate changes totaled six in 2021, 15 in 2022, 10 in 2023, 32 in 2024 and nine in 2025. This year, there were 11 from January through August.
The reasons insurers gave for changing rates have also not been spelled out. Of the 83 rate changes, 65 listed the reason only as "updating of experience statistics." Neither financial authorities nor consumers can tell how much specific underlying costs — repair labor charges, parts prices, medical treatment fees — were reflected.
In some cases, insurers changed rates at the same time for the same reason but applied them by different standards. On July 1, 2024, after a revision to the enforcement decree of the Guarantee of Automobile Accident Compensation Act cut the contribution rate for the victim support program to 0.5% from 1%, all five insurers lowered premiums by 0.1%. But DB Insurance applied the reduction only to personal injury liability coverage I, while the others spread it across all coverages, including own damage. The rate of change was the same, but which policyholders benefited from the cut differed by company.
The FSS says that rate changes not subject to filing are verified by appointed actuaries, whose independence is guaranteed under the Insurance Business Act. But appointed actuaries' verification opinions are submitted only to a company's board or chief executive, not to the FSS. A board can decline to follow an opinion if it judges it inappropriate.
Under the current structure, there are concerns that some costs could be folded into premiums for all policyholders through updates to experience statistics and processed without any verification. That is why many argue that auto insurance, as a mandatory product, at least needs a mechanism to check this. "If there is no pre-verification of rates, after-the-fact verification is the only tool for oversight, and even that is empty," Lee said. "Setting rates can be left to insurers' discretion, but it needs to be managed because the burden on all policyholders can increase."