[Background]
Background of Initiative: To ensure the financial soundness of insurers according to agreements concluded between the Ministry of Climate* and insurers, and to provide legal grounds for an "Environmental Damage Reserve" to prepare for massive insurance payouts due to large-scale environmental pollution accidents, thereby guaranteeing the continuity and predictability of the system for insurers and the public.
※ Conclusion of agreements on the operation of environmental liability insurance business pursuant to Article 18 of the Environmental Damage Relief Act.
Necessity of Government Intervention:
Environmental pollution accidents have a low frequency of occurrence but cause immense damage once they occur and have the characteristic of causing gradual environmental pollution.
Recently, there is a trend of complex environmental pollution accidents occurring, such as chemical substances flowing into nearby rivers during factory fire suppression or damage to surrounding crops due to chemical leaks.
※ Gumi Hydrofluoric Acid Accident (Sep '12): Gov. expenditure 55.4 billion KRW / Gyeonggi-do Hazardous Material Fire (Jan '24): Over 15 billion KRW in damages.
As the total premiums for environmental liability insurance have continuously decreased since 2018 ('18: 78.3 billion KRW → '25 Estimate: 45.6 billion KRW), there are limits to compensating rapidly for damages from massive environmental pollution accidents and distributing business operator risks solely with the current premiums.
[Main Points]
A. Establishment of matters regarding the accumulation rate and operation of the Environmental Damage Reserve (Draft Article 18-3)
The accumulation rate of the Environmental Damage Reserve shall be 15% of net premiums, and the reserve shall be used as insurance money when the loss ratio exceeds 140%.
B. Clarification of payment requirements for Bereaved Family Compensation (Draft Article 17)
Among the payment requirements for Bereaved Family Compensation, the phrase "death caused mainly by the recognized reason" is amended to "death caused by environmental pollution damage" to unify the requirements with those for funeral expenses.
