A Korea Insurance Research Institute researcher proposed on the 26th to narrow the gap between standard auto insurance policy terms and court rulings to reduce social costs, as complaints and litigation over auto insurance claim payouts continue to rise in South Korea. Senior researcher Jeon Yong-sik stated the fundamental cause of complaints lies in claim calculation errors, emphasizing the need to curb excessive compensation expectations and reduce disparities between court awards and standard policy payout criteria. According to financial authorities, damage insurance complaints reached 48,281 cases last year, up 19.6% year-over-year, while fault ratio dispute filings increased from approximately 102,000 in 2019 to 156,000 in 2024, growing at an average annual rate of 8.9%.
Auto Insurance Complaints and Litigation Surge in South Korea
The Korea Insurance Research Institute found that 35% of auto insurance dispute complaints involve fault ratio disagreements, while 37% stem from disputes over claim amount adequacy. Complaints and litigation generate direct costs through the mediation process and can erode trust in the insurance system when used beyond their intended purpose, raising social costs. For claimants with low fault ratios, filing complaints significantly increased final settlement amounts, whereas the effect was limited for those with higher liability percentages. Court litigation can also produce awards exceeding standard policy payouts, leading to additional social costs including premium increases.
Court Awards Exceed Standard Policy Payouts by 4x for Minor Injuries
For injury grades 12 to 14, average court awards from 2021 to 2026 reached 8.4 million won, lower than plaintiff claims of 63.64 million won but more than four times the standard policy-based personal injury insurance payout of 2.08 million won. Jeon noted that large discrepancies between settlement and litigation amounts can cause market confusion, stating that establishing universal and valid standards for auto accident damages is necessary to curb excessive compensation expectations.
Researcher Recommends Aligning Court Precedents with Standard Policy Terms
Jeon emphasized that while court rulings consider multiple circumstances and lack consistent standards, key factors recognized in judgments should be applied to similar accidents. He suggested incorporating court rulings on injury severity and appropriate treatment standards for minor injury patients into standard policy terms as a potential reform measure. The researcher stated that reducing the gap between court precedents and standard policy criteria could lower social costs and stabilize the auto insurance market.
FAQ
Why are auto insurance complaints increasing in South Korea?
Complaints rose 19.6% year-over-year to 48,281 cases last year, driven primarily by disputes over fault ratios (35% of cases) and claim amount adequacy (37% of cases). Fault ratio dispute filings grew from 102,000 in 2019 to 156,000 in 2024 at an 8.9% annual rate.
What is the gap between court awards and standard policy payouts?
For injury grades 12 to 14, average court awards from 2021 to 2026 reached 8.4 million won, more than four times the standard policy-based payout of 2.08 million won, creating significant settlement amount disparities that drive litigation.
What solutions did the researcher propose?
Senior researcher Jeon Yong-sik recommended establishing universal damage standards to curb excessive compensation expectations and incorporating key factors from court rulings on injury severity and treatment standards into standard policy terms to narrow the gap between court awards and policy payouts.
