Ministry of Land, Infrastructure and Transport raises the operating table for used car performance inspections... 'Ending insurance premium burdens that have doubled in five years'

*This content was translated by AI.

The government has launched a comprehensive overhaul of the used car performance and condition inspection system and consumer protection framework. The Ministry of Land, Infrastructure and Transport announced 'Measures to Protect Used Car Consumers' on the 7th, which mandates the display of total costs including fees in used car advertisements and consolidates the existing performance insurance centered on inspectors into a mandatory insurance for dealers.

The core reason the government directly intervened is that structural flaws in the performance warranty insurance, which unfairly shifted excessive economic burdens onto consumers, were confirmed with concrete figures. According to data released by the Ministry of Land, Infrastructure and Transport, insurance premiums passed on to consumers have surged 2.2-fold within five years since the mandatory enrollment for performance insurance was introduced in 2019. In particular, the 'business expenses' portion retained by insurance companies—such as solicitation commissions and operational costs from performance insurance revenue—accounted for a staggering 44%. This is 2.75 times higher than the business expense ratio of general automobile insurance (16%), representing an extravagant level that invites criticism for being improperly used to secure insurance company profits and operating costs rather than providing defect compensation.

Under such wasteful operations, consumer complaints have accumulated significantly, with 80% of used car-related grievances arising from inadequate or insufficient compensation due to flawed condition and performance inspection records. Dealers and inspectors negligently shifted repair responsibilities for defects onto insurance, facilitating substandard inspections, thereby solidifying an abnormal structure where the burden of insurance premiums and damages fell entirely on consumers.

To fundamentally eliminate these flaws, the Ministry of Land, Infrastructure and Transport decided to strengthen administrative penalties, including business suspension, when errors occur in critical inspection items, and to centralize warranty liability with dealers to significantly reduce the insurance premium burden. Additionally, clear refund criteria have been established allowing contract cancellation if major defects (such as repair costs exceeding 30% of the transaction price) occur within seven days after purchase. The ministry aims to eradicate the opaque practice of 'hidden fees' that deceived consumers and strengthen sellers' warranty responsibilities to fully restore trust in the used car market.

Meanwhile, the Diagnosis Warranty Association, which can be regarded as an industry association for performance warranty inspection businesses, has not yet officially clarified its stance on the Ministry of Land, Infrastructure and Transport's policies, according to investigative findings. This is because the association operates under the ministry. Additionally, given the structure where dealers are positioned as consumers, even if performance insurance is consolidated into a mandatory insurance for dealers, it remains difficult for them to strongly criticize the measure, which is cited as another contributing factor.

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*This content was translated by AI.