Heat illness insurance payouts surge fourfold in Gyeonggi’s record summer

Payouts for heat-related illnesses under Gyeonggi's climate insurance program more than quadrupled in just six months compared to the previous full-year period, as record-breaking heat waves took a growing toll on residents' health this summer.

The number of claims also more than doubled, and the insurer paid out a newly introduced death benefit in four cases. With extreme weather increasingly threatening people's health and livelihoods, demand for insurance against climate-related damage is likely to grow.

Payouts for heat-related illness diagnoses and daily hospitalization benefits under Gyeonggi's climate insurance program totaled 208.64 million won ($157,000) across 2,856 claims between April 11 and Oct. 15, according to insurance industry sources on Oct. 25.

That was approximately 4.2 times the 50.26 million won paid out during the previous full-year coverage period, from April 11 last year to April 10 this year. The number of claims also rose about 2.3 times from 1,264.

In other words, payouts over roughly six months far exceeded those made during the entire previous insurance period.

Including newly introduced benefits for emergency room visits and deaths, total payouts reached 233.94 million won across 2,992 claims.

This year, Gyeonggi introduced a 3 million won death benefit for people who die from heat- or cold-related illnesses or climate-related disasters. The city paid four claims totaling 12 million won in September and October.

An estimated 36 people died from heat-related illnesses nationwide this summer, including three reported deaths in Gyeonggi, according to the Korea Disease Control and Prevention Agency. All three deaths in Gyeonggi are believed to have qualified for the new death benefit.

As extreme heat took a particularly heavy toll on older adults and other vulnerable groups, the newly introduced emergency room benefit also recorded 132 claims totaling 13.3 million won.

Climate insurance covers illnesses, accidents and income losses caused by extreme weather events such as heat waves, cold spells and torrential rain. Gyeonggi operates the program as a group insurance policy and pays the full premiums on behalf of its residents, who are automatically enrolled without having to apply.

When a regional government purchases climate insurance for its residents, eligible individuals can file claims for heat-related or cold-related illnesses or climate-related accidents that meet the policy's coverage requirements. They must submit supporting documents, and the insurer pays benefits after reviewing the claims. Residents do not need to purchase individual policies.

Jeju Island also introduced climate insurance in July this year, though its program takes a different approach. While Gyeonggi focuses on covering health-related damage, Jeju's program aims to compensate workers for income lost when extreme heat forces them to stop working.

Launched on July 28, the program covers eligible day laborers at public construction sites. If a heat wave warning or similar alert is issued before 1 p.m. and work is suspended, workers can receive partial compensation for income lost during the suspension.

Private insurers are also expanding their climate-related offerings.

Tongyang Life Insurance launched a small-scale insurance product in August that covers heat-related and cold-related illnesses.

KB Insurance introduced weather-related damage insurance for traditional markets, available through merchants' associations, and added optional coverage for heat-related and cold-related illnesses to its travel insurance products.

NongHyup Property & Casualty Insurance offers additional coverage for livestock losses caused by extreme heat.

As concerns about extreme weather damage grow, insurance payouts could rise further.

Claims can be filed up to three years after an incident, so benefits for illnesses that occurred during the coverage period may be paid later. The payout for a heat-related illness diagnosis also increased from 100,000 won to 150,000 won this year, while growing awareness of the program could encourage more residents to file claims.

"We are receiving about 150 to 200 inquiries and claims a day," an official at the insurer underwriting Gyeonggi's climate insurance program said.

However, critics point to the program's heavy concentration of payouts on transportation expenses for medical visits among climate-vulnerable residents as a persistent limitation.

The program provides 20,000 won per medical visit for transportation costs, up to five times per eligible resident.

Of the 39,451 claims paid under Gyeonggi's climate insurance program this year, 36,301, or 92 percent, were for transportation expenses. That was down 2.6 percentage points from 94.6 percent last year, but transportation expenses still accounted for more than nine out of every 10 claims, raising questions about whether the program provides sufficient protection against the direct health and financial consequences of climate-related illnesses and accidents.

BY KIM DA-YOUNG [[email protected]]