Enrolment in voice phishing compensation insurance at South Korea’s four biggest banks is falling. A bill moving through the National Assembly – one that would require those banks to compensate victims regardless of fault – may force a rethink across the entire market.
According to The Asia Business Daily, the number of policies issued across KB Kookmin, Shinhan, Woori, and Hana Bank dropped from 16,268 in 2024 to 14,707 in 2025. In the first half of this year, only 5,659 new policies were recorded. At that pace, full-year totals would fall below last year’s figures.
The pattern is largely structural. These products are offered as free supplementary services, with banks covering premiums on customers’ behalf. Without active promotion, enrolment does not sustain itself. As reported phishing incidents have also declined – the Financial Services Commission (FSC) recorded a 39.9% drop in cases between October 2023-July 2024 and October 2024-July 2025, with total damages down 43.2% from 1.1137 trillion won to 632.4 billion won – consumers have less perceived reason to enrol, even at no cost.
NH Nonghyup Bank ran a different approach. Entering the segment in March 2026, it enrolled 114,780 customers in voice phishing compensation insurance in the first half of this year alone – more than seven times the combined annual total of the four major banks in all of 2025, according to The Asia Business Daily.
The product was jointly developed by NH Nonghyup Bank and NH Nonghyup Property & Casualty Insurance, targeting customers aged 60 and older with free enrolment covering 70% of voice phishing losses up to 10 million won. The bank conducted field promotions by visiting senior welfare centres, senior citizen halls, and nursing facilities directly, according to Seoul Economic Daily.
The gap between NH Nonghyup and its peers is not a product gap. It is a promotion and institutional commitment gap. For insurers and brokers watching this segment, that is a meaningful signal: enrolment responds directly to how actively a bank pursues distribution.
The more significant development for the insurance market is a bill before the National Assembly. South Korea’s FSC submitted a proposal to lawmakers in July 2026 requiring banks to compensate voice phishing victims unless they can demonstrate a statutory exemption. That reverses the current burden of proof, under which victims must prove institutional negligence. Under the proposed framework, liability would split 50/50 between the bank used by the victim and the institution holding the fraudulent account, with compensation capped by presidential decree within a range of 10 million won to 50 million won per case.
FSC chairman Lee Eog-weon put the government’s position on the record at a meeting with the heads of South Korea's five largest financial groups. “We will actively pursue the introduction of a no-fault liability system to strengthen the financial sector’s accountability for phishing crimes and provide more effective relief for victims” he said, as reported by The Korea Times.
Two bills incorporating the measure are pending in the National Assembly. The FSC also listed the amendment to the Telecommunications Fraud Refund Act as a legislative priority for the second half of the current parliamentary term, Seoul Economic Daily reported.
The FSC’s own cost projections put the potential annual payout burden for financial firms at up to 281.1 billion won at a 50 million won cap per case, and 109.8 billion won at a 10 million won cap, according to Seoul Economic Daily.
Banks are pushing back. The Korea Federation of Banks told lawmakers that “voice phishing can only be prevented and addressed through the combined efforts of multiple parties, including consumers remaining vigilant, telecom companies blocking spam and smishing messages, financial institutions detecting suspicious transactions, and law enforcement agencies dismantling criminal organizations and recovering stolen funds,” per The Korea Times.
Industry officials have also raised moral hazard concerns. “Once a no-fault compensation system is introduced, there can easily be attempts to exploit it,” one banking official said, as quoted by The Korea Times.
If the no-fault framework passes, the commercial logic for this insurance class shifts in a specific way. Today, these products sit at the margins of bancassurance – underwritten by non-life insurers, distributed free by banks as a consumer goodwill measure, and driven largely by individual bank promotion decisions. Non-life insurers including Hyundai Marine & Fire Insurance, KakaoPay Insurance, and Lotte Insurance have been expanding standalone retail products in this space. Voice phishing and online financial fraud losses exceeded 350 billion won in the first five months of 2026, according to Seoul Economic Daily.
A mandatory compensation regime gives banks a direct balance-sheet reason to hold these products at scale – not as a customer benefit, but as institutional risk transfer. Volume, pricing, and distribution relationships all shift when the buyer motive changes from goodwill to liability management.
An official from a major commercial bank put it plainly, as quoted by The Asia Business Daily: “Compensation insurance serves as both a way to make victims whole and a means of distributing the compensation burden for financial institutions, so it is likely to be more widely utilized in the future.”
For brokers advising financial institution clients in South Korea, the question is whether this legislation converts voice phishing coverage from a supplementary product into a core procurement decision. The National Assembly’s deliberations in the months ahead will determine the answer.
