Financial authorities and Korea Deposit Insurance Corporation are moving to raise deposit insurance premiums across all financial sectors for the first time since 2009.
According to the financial sector on the 29th, officials from the Financial Services Commission, the deposit insurance corporation, and representatives from each financial sector held their first public-private joint task force (TF) meeting this month to discuss the proposal to raise deposit insurance premiums.
This discussion on raising deposit insurance premiums is interpreted as a follow-up measure to expand the resources of the deposit insurance fund after the deposit protection limit was raised from 50 million won to 100 million won last September. Kim Sung-sik, president of the deposit insurance corporation, also stated during the National Assembly Political Affairs Committee's work report on this day: "The deposit protection limit was raised to 100 million won last September," and added, "To ensure stable operation of the system, we will reasonably calculate the target size of the deposit insurance fund and the premium rate reflecting the limit increase."
Currently, the deposit insurance premium rates are set at 0.08% for banks, 0.15% for life insurance, property-casualty insurance, and securities firms, and 0.4% for savings banks. Financial authorities are understood to have proposed different premium rate increase plans for each sector. The premium rates are adjusted by comprehensively considering factors such as default risk and the fund's burden capacity specific to each sector, reflecting this in differentiated charges. Accordingly, differences in rates are expected even among life insurance companies, property-casualty insurers, and securities firms that currently apply the same premium rate.
In particular, while banks, securities firms, and savings banks are expected to see only a slight increase, the insurance sector where distressed financial institutions such as Hana Insurance have emerged is facing proposals for significantly higher deposit insurance premium rate increases than before, which is expected to trigger opposition.
The current deposit insurance premium rates have remained at levels set in 2009, excluding savings banks. Savings banks had their premium rates adjusted once following the 2011 savings bank crisis. The deposit insurance premium rates to be finalized this time are scheduled to take effect from 2028.
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