FSC lays out plan to boost pet insurance enrollment
The Financial Services Commission, Korea's top financial regulator, unveiled plans on Monday to increase the pet insurance enrollment rate, currently at approximately just 1 percent in a country with some 8 million pets.
"The pet insurance enrollment rate in the US is approximately 2 percent, while in Japan, it exceeds 12 percent. Our goal is to position ourselves between these two countries,” Shin Sang-hoon, head of the insurance department at the FSC, emphasized during a press briefing held in Seoul on Monday.
According to a survey conducted by the Ministry of Agriculture, Food and Rural Affairs, there are approximately 7.99 million dogs and cats here, as of 2022. Among their owners, 83 percent find the high costs of veterinary care burdensome.
Despite the financial burden of owning a pet, the pet insurance enrollment rate in Korea stood at around 0.9 percent last year, significantly lower than countries like the United Kingdom (25 percent) and Japan (12.5 percent).
To provide impetus to the slow domestic pet insurance market, the government has formed a special task force team with involvement from the FSC, Ministry of Agriculture, Food and Rural Affairs, Ministry of Economy and Finance, the Financial Supervisory Service and other experts in the area.
The establishment of the task force aligns with policy commitments made by President Yoon Suk Yeol during his presidential campaign for the development of the pet insurance market in Korea.
First lady Kim Keon Hee also has demonstrated a significant interest in the task force's plan, according to sources.
The government's plan mainly focuses on creating a more systematized environment, as this has been identified as a key factor deterring pet insurance enrollment.
It will consider allowing pet registration using biometric data such as noseprints or iris scans. It also plans to make the registration of not only dogs but also cats mandatory.
The plan includes making it mandatory for hospitals to issue medical records and medical expense documentation when customers request them to file insurance claims as well.
Additionally, standardization of 100 different diseases is planned for implementation.
The plan also seeks to increase customer convenience by establishing a one-stop service to allow pet owners to enroll in insurance, file insurance claims and manage their pet's health and registration all in one place.
To achieve this, the range of pet insurance products available for sale at local animal hospitals and pet shops will be expanded from short-term products of one year or less to long-term products of three to five years, starting in the latter half of this year.
Also, in the first half of next year, a system is expected to be implemented that allows pet owners to transmit medical records to insurance companies with a single click at animal hospitals.
"The most important thing is cooperation between the insurance and veterinary industries. We are continuously discussing what incentives are needed, especially in hospitals that cooperate with insurance companies," Shin stressed during the press briefing.
For example, in cases where hospitals cooperate, insurance companies may support their pet registration system, he added.
More customized insurance products tailored to the needs and characteristics of pet owners and their pets will also be offered. Currently, 11 insurance companies are selling pet insurance, but according to the FSC, the limits and premiums provided differ only slightly.
As one of the solutions to this problem, specialized pet insurance companies will be permitted to newly enter the market starting from this year.
The FSC said that two companies have currently expressed their intention to apply for the permit.
"One of these companies is doing pet tech businesses, such as pet health care and e-commerce for pets," Shin hinted.
"The other is a subsidiary created by a consortium led by existing insurance companies and their strategic partners,” he added.