The Financial Services Commission is preparing measures to ease the shipping industry's insurance premium burden and support liquidity amid the Middle East crisis.
According to Yonhap News on the 3rd, the Financial Services Commission plans to hold the "4th industry–financial sector meeting on Middle East situation-affected sectors" as early as mid-month, chaired by Lee Eog-weon, and discuss concrete support measures for the shipping industry.
The government has reportedly begun coordinating so that domestic private reinsurers, including Korean Reinsurance Company, can supply insurance products needed for vessel passage at reasonable prices. Many of the ships currently stuck in the Strait of Hormuz do not carry the passage insurance required to transit the strait. Because data on alternative routes is lacking, the insurance products themselves are limited, and premiums are also very high.
In general, because marine insurance involves high risk, multiple insurers underwrite policies jointly and then pass them on to reinsurers to disperse risk. The Financial Services Commission (FSC) is said to be pushing a plan to induce domestic reinsurers to lower the commissions they charge primary insurers, thereby reducing the premiums borne by shipping companies.
The crisis has also prompted talk of introducing a "national reinsurance" system. In situations of crisis such as war, when premiums surge sharply, the government would inject fiscal resources to share part of the risk and build a public reinsurance framework.
The Financial Services Commission (FSC) is also reportedly reviewing liquidity support for the shipping industry. This is because, given the characteristics of shipping, surcharges on insurance premiums in emergencies, higher risk allowances for crew, and fuel cost increases due to spikes in oil prices create heavy burdens. Led by creditor banks such as Korea Development Bank, measures are expected to be considered to defer repayment of existing debt for a set period and to provide additional financial support in parallel.