Over the past five years, approximately 80% of the economic losses caused by heavy rain in South Korea were not covered by insurance, leaving individuals and local governments to shoulder the burden.

According to a joint study by the Seoul National University Climate Tech Center and the Samsung Fire & Marine Insurance Corporate Safety Research Institute, the protection gap—meaning losses not covered by insurance—averaged 82% of South Korea's economic losses from heavy rain between 2020 and 2024.

While the scale of economic losses is growing as climate disasters become a regular occurrence, preparation by individuals and local communities to handle the financial burden remains insufficient.

According to the study, the global average annual economic loss from natural disasters increased from approximately 372 trillion won in 2016–2020 to about 374 trillion won in 2021–2025.

South Korea's heavy rain protection gap is similar to the global average of 82%, but lags behind advanced economies such as Germany (75%).

During the heavy downpours in September 2024, the nation's total economic loss reached 427.9 billion won, while the protection gap hit 94%.

Only 6% of the damage was covered by insurance.

An even bigger problem is the polarization of the protection gap.

The study showed that rural and low-density areas, which experience low-intensity, cumulative rainfall, have a wider protection gap than urban areas.

During the heavy rain in July 2021 that caused cumulative damage in rural areas including the southern provinces, economic losses were relatively low at 329.5 billion won, but the protection gap was 98%.

In contrast, the heavy rain in August 2022, which was concentrated in the Seoul metropolitan area and recorded a peak hourly precipitation of 141 mm, resulted in economic losses reaching 826.1 billion won, yet the protection gap was comparatively lower at 60%.

Researchers cited the low property insurance subscription rates among industrial facilities in rural and low-density regions as a key factor behind this polarization.

They also noted that in cases of small-scale disasters, people frequently fail to claim insurance payouts because the perceived compensation amount is low.

The researchers pointed out that if the current structure is maintained in South Korea, the frequency and intensity of climate disasters will increase, ultimately weakening national resilience.

They also advised that to prepare for losses from climate disasters, insurance penetration rates must be increased and the focus shifted toward a national-level pre-disaster prevention system.

Discussions on the necessity of "climate insurance" have also begun at the government level.

As climate disasters recur—with recent heavy rains causing severe damage in regions such as Gwangju-Jeonnam, Chungnam, Jeonbuk, and Gyeongnam—there is a growing movement to explore broader and more diverse damage recovery measures.

A representative example is the Act on Climate Crisis Adaptation and Enhancement of Resilience, which passed the plenary session of the National Assembly on the 26th of last month.

The legislation includes a provision stating that the government and local governments should endeavor to develop climate insurance capable of compensating for damages caused by the climate crisis.

It also laid the groundwork to conduct fact-finding surveys and support projects for populations relatively more vulnerable to climate disasters, and to build an integrated climate insurance information system.

However, experts pointed out that as climate disasters tend to become increasingly extreme, establishing practical measures that go beyond mere "declarative clauses" remains a future task.


(Photo: Yonhap News)