Insurance laws North Korea
North Korea's insurance system is primarily state-controlled, serving as a mechanism for funding government initiatives rather than functioning as a conventional market-driven industry.
📜 Legal Framework
The Insurance Law of the Democratic People's Republic of Korea, adopted on April 6, 1995, and amended multiple times, provides the legal foundation for insurance activities in the country The most recent amendment occurred on April 8, 2015 This law outlines the structure and principles governing insurance, including definitions, classifications, and the roles of various parties involved in insurance contracts It also establishes the framework for personal and property insurance, insurance companies, and the central guidance institution responsible for oversight
🏢 Insurance System Overview
1. Korea National Insurance Corporation (KNIC)
KNIC is the sole state-run insurance provider in North Kore. It administers two main types of insuranc:
Individual Insurance This is a compulsory program where premiums are automatically deducted from salarie. The collected funds are directed into the state-run healthcare system and other government initiative. Individuals cannot file claims under this insurance; all payments are used to cover healthcare costs and other state-directed use.
Enterprise Insurance Also mandatory, this covers property losses from various perils, excluding wa. The insurance is structured on a pooled basis, with pricing set without regard to individual risks or loss histor. There are no separate policies for specific risks like windstorms or earthquakes; instead, coverage is specified by the type of property insure.
2. Regulatory Oversight
The central insurance guidance institution is responsible for overseeing insurance activities in North Kore. However, in practice, there is no independent regulatory authority overseeing KNIC's operation. The Central Bank and Finance Ministry are theoretically involved, but they lack the expertise and political backing to effectively regulate the industr. Oversight is primarily provided by the ruling party, which offers political supervision rather than technical or financial oversigh.
⚠️ Limitations and Issues
Lack of Risk-Based Pricing Insurance premiums are not determined based on individual risks or loss historie. Instead, they are set on a pooled basis, which can lead to inefficiencies and misalignments between premiums collected and claims pai.
Absence of Reserves There are no reserves to cover potential future claim. he state absorbs any losses or profits, which can strain public finance.
Alleged Mismanagement There have been reports suggesting that KNIC may be involved in reinsurance fraud, such as submitting false claims or retaining a portion of claim settlements rather than passing them on to the insure.
Inadequate Coverage for Foreign Investments The existing insurance arrangements are reportedly inadequate for the needs of foreign joint ventures operating in the Special Economic Zone. This poses challenges for attracting foreign investment, as investors often expect insurance systems that align with international standard.
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