Insurance Industry to Launch Free Mutual Insurance for Small Business Owners in September... Coverage Includes Climate and Cyber Risks

Credit Life Insurance Assists Loan Repayment for Small Business Owners
Non-life Policies Cover Fire, Business Interruption, Cyber, and Weather Risks
Insurance Sector Establishes 30 Billion Won Mutual Fund
Around One Million Small Business Owners Expected to Benefit

The insurance industry, in collaboration with local governments, is introducing free mutual insurance for small business owners exposed to various risks such as illness and accidents.

Lee Okwon, Chairman of the Financial Services Commission, is giving a welcoming speech at the agreement ceremony for the free win-win insurance support project for small business owners and vulnerable groups held at the Life Insurance Education and Culture Center in Jongno-gu, Seoul on March 16, 2026.

The Financial Services Commission announced on September 1, 2026, that the insurance industry will launch free mutual insurance products with a budget of 2 billion won each in seven local governments: Gyeongnam, Gyeongbuk, Gwangju, Jeonnam, Jeonbuk, Jeju, and Chungbuk.

To reduce the insurance premium burden on vulnerable groups, both the life and non-life insurance sectors contributed 15 billion won each, establishing a mutual fund totaling 30 billion won. Through a public contest among local governments, six—Gyeongnam, Gyeongbuk, Gwangju, Jeonnam, Jeju, and Chungbuk—were selected, and along with the existing Jeonbuk, a total of seven regions prepared insurance products tailored to their local needs. Task forces consisting of local governments and the insurance industry have been working on launching these products.

In the life insurance sector, “credit life insurance” will be introduced in six locations: Gyeongnam, Gyeongbuk, Gwangju, Jeonnam, Jeju, and Chungbuk. Eligible applicants include small business owners operating within these regions who currently hold loans from designated financial institutions or are borrowers using policy-based microfinance. In case of the death of an insured person or diagnosis of one of three major diseases—cancer, cerebral hemorrhage, or acute myocardial infarction—up to 10 million won can be paid out to cover the loan repayment. Any insurance benefits remaining after repaying the principal and interest will be paid directly to the insured individual.

The products will be launched sequentially in each local government starting from September 1, 2026. Jeju and Chungbuk will accept individual applications through designated executing institutions, while Gyeongnam, Gyeongbuk, Gwangju, and Jeonnam will select eligible applicants and notify them via SMS about their eligibility. Policyholders will be covered for one year after enrollment.

Additionally, for loans from Industrial Bank of Korea secured by the mutual credit life policy, a maximum extra preferential interest rate of 0.3 percentage points will be applied on top of the standard preferential rate. When using “Sunshine Loan” products newly issued by the Korea Inclusive Finance Agency, the first-year guarantee rate will be reduced by 0.3 percentage points.

In the non-life insurance sector, products reflecting local characteristics will be offered in seven regions. In Gyeongnam, fire liability insurance will cover up to 100 million won for third-party deaths or injuries caused by fires at small restaurants. In Gyeongbuk, business income loss due to hospitalization from illness or injury for small business owners will be covered up to 50,000 won per day. Gwangju will introduce a business liability insurance that compensates up to 30 million won for third-party damages caused by business accidents.

Jeonnam will provide “Safety Insurance” for young small business owners aged 15 to 49, covering accidental death and work-related injuries. Chungbuk will introduce cyber insurance covering losses from phishing or unauthorized payments linked to mobile phone loss, up to a maximum of 3 million won. In Jeonbuk, self-pay support for weather disaster insurance for small business owners will be provided, and a comprehensive policy—including injury consolation payments and fire compensation for businesses with annual sales of less than 300 million won—will be introduced in September.

With the exception of Jeonbuk’s weather disaster coverage, non-life insurance products will be automatically enrolled for eligible individuals in their respective regions without requiring a separate application. However, in the event of an insured incident, beneficiaries must file claims directly with the insurer and provide documentation that they continue to meet the eligibility requirements.

The Financial Services Commission expects that approximately one million small business owners across these seven regions will benefit from this new free mutual insurance program.

The Commission, working in partnership with local governments and the insurance sector, plans to ensure smooth enrollment and operation of the program. Furthermore, it aims to use the remaining 17.4 billion won from the mutual fund to assist vulnerable groups—such as elderly people living alone and other underserved seniors—not only by offering free insurance but also by expanding support programs that integrate both financial and non-financial assistance, including health management and medication guidance.

This content was produced with the assistance of AI translation services.