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S. Korean insurance firms: Imported cars costlier to repair

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(Globalpost/GlobalPost)

Repair costs for imported automobiles in South Korea are on average three times more expensive than those charged for domestic cars, a report showed Friday, amid a move by non-life insurers to revamp pricing standards for fixing foreign vehicles.

The average repair expenses for imported cars here came in at 2.61 million won (US$ 2,309) per individual in 2011, compared with the average of 846,000 spent to fix a domestic vehicle, according to the report by the Insurance Development Institute.

Non-life insurance companies paid out a combined 642 billion won in insurance payout to policyholders for foreign car repair costs in that year, the report said.

There were 263,294 auto insurance payout cases for fixing high-end overseas cars, taking up only 5 percent of the total cases. But the amount paid accounted for 12 percent of the total payments, reflecting their much higher costs, it added.

Such higher repair expenses for imported cars came as their parts are much more expensive than those installed in domestic ones, the report said. Moreover, the pricing standards for fixing foreign vehicles are arbitrary by auto repair shops, leading to higher costs.

The average repair costs for foreign auto parts stood at 1.85 million won, five times more costly than those needed for home products, the report said.

To bring down inflated costs and make the market more transparent, the insurance industry and the country's Fair Trade Commission have set up a team to draw up objective pricing standards for foreign car repairs. Higher repair costs have partly been a reason for slashing non-life insurers' profits.

As of end-2012, the number of imported cars sold in Korea came in at about 750,000, with the corresponding figure for reported accidents involving a foreign vehicle reaching 250,000 cases, up from 200,000 the previous year, according to the report.

Philippines News agency

http://www.globalpost.com/dispatch/news/asianet/130412/s-korean-insurance-firms-imported-cars-costlier-repair