Insurance comparison service to come with high platform fees

[Photo by MK]

A new service launching this week, which offers insurance recommendations and price information, is expected to face the challenge of high commission fees paid to platform operators.

According to industry sources on Sunday, the commission fees allocated to tech platform operators have been set at higher-than-expected rates, which could lead to increased insurance premiums.

Insurers have settled on a commission rate of 3 to 3.7 percent of auto insurance premiums for platform operators that provide insurance comparison and recommendation services.

In response to higher fees for app providers, major insurers are expected to introduce a set of new premium rates for consumers. The four major non-life insurers, including Samsung Fire & Marine Insurance Co., Hyundai Marine & Fire Insurance Co., DB Insurance Co., and KB Life Insurance Co. plan to add platform channels to their current three rate systems, including face-to-face, telephone(TM), and online(CM).

Premiums vary depending on which channels the customers use to sign up.

Data from the Korea Insurance Development Institute found that car insurance consumers spend an average of 639,375 won ($486) on the premiums of the insurance they signed up via each company website. With a 3.5 percent fee paid to the platform, for example, there will be an additional cost of 22,378 won in the premiums.

Financial authorities, in the meantime, urged platforms and insurers to adopt a consumer-friendly approach in the fees.