South Korea’s insurance companies are to offer a maximum 5 percent discount on insurance for cars equipped with black boxes, according to industry sources on Saturday.

Local insurers including Dongbu Insurance, Meritz Insurance, Hanwha General Insurance, LIG Insurance, AXA Direct and Hyundai Hicar Direct decided to give a discount of 5 percent; Samsung Fire & Marine Insurance 4 percent; and Green Non-life Insurance and Ergo Daum Direct 3 percent.

The discount for black-box equipped cars was only about 1 percent to 2 percent up until last year, but increased as insurers took into account that more drivers are installing the device in their vehicles.

“The number of black box-installed cars is on the rise. We plan to provide the industry’s largest discount rate to attract more customers,” said an official at Dongbu Insurance.

Insurers encourage drivers to install black boxes in their automobiles as the device helps in lowering the loss ratio for the companies by reducing car accidents, providing evidence in case of accidents and preventing insurance fraud.

About 500,000 drivers have signed up for car insurance under the black box agreement as of the second quarter of this year, according to the industry observers.

Insurers also offer premium discounts for cars equipped with air bags in the front two seats.

Samsung Fire & Marine Insurance offers the biggest discount rate of 30 percent, followed by Meritz Insurance, Hanwha General Insurance, Green Non-life Insurance, Hyundai Hicar Direct, LIG Insurance, Dongbu Insurance and Ergo Daum Direct with 20 percent.

By Park Min-young  (claire@heraldcorp.com)