FSC to revise measures for pet insurance in SK: Report

Lack of veterinary treatment and limited public awareness of pet insurance has been a factor in the small market penetration.

Only 1.1% of pets in South Korea are insured, improving from 0.4% in 2020 and 0.9% in 2019, the Korea Times reported.

Industry insiders attribute the low penetration of pet insurance policies in South Korea to a lack of veterinary treatment and limited public awareness of pet insurance. 

The insurance sector has highlighted the absence of standardised animal medical fee systems, treatment codes, and veterinary medical expense data as major impediments to further market growth. 

The lack of a standardised system complicates insurers' efforts to calculate insurance premiums and manage loss ratios.

In response to these challenges, South Korea's Financial Services Commission (FSC) and other related ministries have been working on measures to promote the pet insurance market. 

READ MORE: Pet insurance contracts grow by 22% in 1st half

These initiatives include streamlining veterinary medical procedures, implementing electronic billing, and seeking pet registration. 

Given that the growth of the pet insurance market aligns with the policy goals of the Yoon administration, the FSC, the Ministry of Agriculture, Food and Rural Affairs, KIRI, and other institutions have collaborated to develop measures for boosting the market.

New measures are expected to be unveiled by the FSC in October.

Comparatively, the percentage of insured pets remains much lower than in other countries, with countries like Sweden boasting a 40% rate, the UK at 25%, and the US at 2.5%, as per data from the Korea Insurance Research Institute (KIRI).

During the first half of this year, South Korea witnessed a substantial increase in the number of pet insurance policy contracts, reflecting the growing trend of pet ownership and pet insurance products in the country.

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Pet insurance is designed to cover expenses incurred when a pet falls ill. Currently, eleven insurance firms offer pet insurance plans in South Korea.

According to the insurance industry, the total number of pet insurance policy subscriptions across these eleven firms reached 87,911 during the first half of the year, marking a significant 22.3% increase compared to the same period last year.

These insurance providers collectively received ₩21b ($15.7 million) in premiums from pet insurance policyholders in the first half of the year. This amount is similar to the total annual premiums of ₩21.3b received by insurance companies from policyholders throughout all of 2021. 

In 2021, the entire annual premiums reached ₩28.8b.