Lawmaker pushes to mandate 70% state coverage of disaster insurance premiums

For years, small business owners, farmers and fishers have hesitated to enroll in disaster insurance despite the threat of typhoons, heavy rain and drought, deterred by premium costs. Legislation now moving through the National Assembly aims to change that.

Rep. Bok Gi-wang of the Democratic Party of Korea, who represents Asan in South Chungcheong Province and serves as secretary of the Land, Infrastructure and Transport Committee, said Monday he had introduced three amendment bills to eliminate blind spots in the country's disaster safety net: revisions to the Agricultural and Fishery Disaster Insurance Act, the Wind, Flood·and Earthquake Disaster Insurance Act, and the Act on the Protection and Support of Small and Medium Enterprises.

Under current law, the central government and local governments must subsidize a portion of disaster insurance premiums within their budget limits. But local governments with high disaster risk and low fiscal self-sufficiency have little capacity to provide additional support, leaving enrollment rates largely dependent on the financial condition of the area where a person lives.

According to Bok and other lawmakers, the enrollment rate for wind, flood and earthquake disaster insurance among small business owners in South Gyeongsang Province — which suffered severe flooding from last year's torrential rains — stood at just 3.3 percent, well below the national average of 6.5 percent recorded in 2024. Critics say the structure means coverage gaps are widest precisely in areas facing the greatest disaster risk and the weakest fiscal conditions.

In response, the amendments to the Agricultural and Fishery Disaster Insurance Act and the Wind, Flood and Earthquake Disaster Insurance Act would require the central and local governments to jointly cover at least 70 percent of premiums for small-scale farmers and fishers, residents in high-risk disaster zones, and small business owners.

The bills also establish a legal basis for full premium coverage for recipients of basic livelihood benefits and those in the next-lowest income bracket. The amendment to the small business support act would give preferential treatment under the Small and Medium Business Market Promotion Fund to small business owners enrolled in disaster insurance, providing an additional incentive for sign-ups.

Under the current 55 percent subsidy rate, a small business owner pays an annual premium of 63,100 won ($42) and can receive up to 50 million won in insurance payouts. If the amendments pass and the subsidy rate rises to 70 percent or more, the same policyholder's annual premium would fall to about 42,000 won — roughly 1,750 won per month — while retaining eligibility for the same maximum payout of 50 million won.

Closing the coverage gap between regions is also expected to address the fiscal sustainability of policy insurance programs, including a loss ratio for wind and flood insurance that reached 236.4 percent in the first half of 2025, driven in part by low enrollment rates.

"By enshrining in law the state's minimum responsibility for disaster insurance, this will be an opportunity to build a tight safety net that prevents disaster damage from immediately translating into the collapse of people's livelihoods," Bok said.