“You’ll have a deductible after this month, sign up now!”

This is the kind of urgency that we often see in the insurance industry – the sense of urgency, as if something really bad is going to happen if you don’t sign up right away. Insurance is a product that changes in price (premiums) and coverage through product revisions, so there is a lot of early bird marketing that tries to get consumers to sign up before the coverage changes. Although there are concerns about the damage to consumers due to excessive early bird marketing, it is still practiced to build up sales. This week, we’ll take a look at the latest hot topic in the insurance industry: discounted auto insurance.

Deductibles for auto insurance?

Recently, the insurance industry has been talking about driver’s insurance. Apart from auto insurance, which is a compulsory insurance, driver’s insurance is a typical product that covers the death of a driver due to injuries or expenses related to a car accident. Although it is not compulsory like auto insurance, drivers are increasingly purchasing additional insurance to get more coverage.

The most attractive coverage items of driver’s insurance are driver’s fines, traffic accident processing support, and attorney’s fees. In particular, traffic accident processing support is a coverage that supports criminal settlements if a driver is involved in a grossly negligent accident such as running a red light, crossing the center line, or invading a sidewalk, or if a victim dies. In general, it provides coverage up to a limit of 10 million to 30 million won, but the limit has recently been raised to 200 million won due to fierce sales competition among insurers.

The limit for attorney’s fees has also been raised from 50 million won to 70 million won, and some have even gone as high as 100 million won, due to fierce competition among insurers. As competition heated up, the financial regulator, concerned about insurance fraud using attorney’s fees, issued a consumer advisory, which indirectly put the brakes on, and non-life insurers began to lower the limit.

In the meantime, rumors began to circulate in the insurance industry that a 20% deductible system would be introduced for driver’s insurance from July. The new deductible means that even if a driver’s insurance policyholder receives up to 200 million won in insurance benefits for traffic accidents, he or she will have to pay 40 million won out of pocket.

Some insurance agents are conducting sales promotions with the phrase, “Deductible for driver’s insurance from July! Only customers who sign up by June 30 will be covered for all amounts.” Although the Korea Non-Life Insurance Association has officially stated that “nothing concrete has been decided,” the enthusiasm for sales promotions has not died down.

“Sign up now or lose”… Tapping into consumer psychology

The reason why insurers are using inaccurate facts to market their products is to compete for market share. The number of driver’s insurance policies sold has increased from about 2 million per year to about 5 million since the implementation of the Civil Eating Act in 2020. Especially since there are more than 20 million auto insurance policyholders, all of whom are potential customers for driver’s insurance, insurers are forced to actively compete.

The premiums are also low, ranging from 10,000 to 30,000 won, and the loss ratio is 60 to 70 percent, which is lower than that of auto insurance, so it is considered a beneficial product for insurers. That’s why insurers are pushing hard to increase coverage limits. Of course, in the past, there have been many cases where agents have competed excessively for sales due to coverage reductions in property and casualty insurance, cancer insurance, etc.

However, this overheating is likely to lead to consumer harm, especially as excessive sales pitches can play on the “take it or leave it” mentality of consumers, encouraging them to buy unnecessary insurance. In the case of the recently overheated driver’s insurance, the financial regulator emphasizes the need to be careful because there are about 100 or more add-ons, which can lead to complaints if consumers don’t fully understand all of them.

A long history of out-of-print marketing…”It boomerangs back”

While financial authorities are calling for restraint in excessive out-of-print marketing, voices of self-restraint are beginning to emerge from within the industry. At a recent press conference, Ahn Chul-kyung, head of the Insurance Research Institute, pointed out that “the biggest reason for the recent liquidity crisis of insurers is due to out-of-print marketing in addition to sharp interest rate hikes.”

“Out-of-print marketing is a practice that has been going on since the history of the Korean insurance market, but in the long run, it has very negative consequences and eventually boomerangs back to the market,” Ahn said. “The recent liquidity risk was also caused by the expiration of savings insurance policies sold through out-of-print marketing 10 years ago.”

The recent liquidity risk was caused by the expiration of savings insurance policies sold a decade ago. The recent liquidity risk was caused by the expiration of savings insurance policies sold a decade ago. As insurance is a more complex structure than general financial products, it is most important to check carefully and sign up based on ‘your needs’ rather than signing up based on a recommendation.

★ Smart tips

Here’s what to look for when buying car insurance토토사이트. Expense coverage only covers actual expenses, not the full policy limit. It is important to note that if you have more than one coverage, such as attorney’s fees or fines, they will not be duplicated and will only cover the actual expenses, not the full coverage.

Does it cover all car accidents? Auto insurance covers injuries and expenses resulting from traffic accidents that occur while you are operating a motor vehicle, but it does not cover accidents that occur while you are driving without a license, under the influence of alcohol or drugs, or fleeing the scene of an accident (hit-and-run).

It is also important to read the terms and conditions and the product manual carefully to check the coverage before enrolling, as similar coverage names may not mean the same coverage, and even if the coverage is the same, the name of the coverage may be different.