South Korean financial sector protests proposed deposit insurance premium hikes

South Korean financial authorities and the Korea Deposit Insurance Corporation (KDIC) have begun recalculating deposit insurance premium rates for implementation in 2028. A recent research study has proposed increases ranging from 1.4 to 3.3 times the current rates, sparking significant pushback from the financial sector.

Proposed adjustments include raising bank premiums from 0.08% to 0.13%, life insurance from 0.15% to 0.40%, and non-life insurance from 0.15% to 0.50%. Other sectors, such as investment and savings banks, also face proposed hikes.

The KDIC argues that the actual financial burden on institutions may be mitigated because the “special contribution fund” for repaying deposit insurance bonds, which has been paid since the foreign exchange crisis, is set to expire next year. However, industry representatives argue that the premium hike should be treated as a separate issue and that the proposed increases are excessive.

Insurance companies have also criticized the research methodology, claiming the quantitative models fail to adequately reflect asset and liability changes following the introduction of the IFRS17 accounting standard. Financial authorities plan to continue task force discussions through November to finalize the rates and pursue enforcement decree amendments next year.