THE INSURANCE LAW OF THE DEMOCRATIC
PEOPLE’S REPUBLIC OF KOREA
Adopted by Resolution No. 58 of the Standing Committee of the Supreme People’s
Assembly on April 6, 1995,
amended by Decree No.383 of the Presidium of the Supreme People’s Assembly on
February 4,1999, and
amended and supplemented by Decree No. 3038 of the Presidium of the Supreme
People’s Assembly on May 16, 2002
Chapter 1. Fundamentals
Article 1. The Insurance Law of the DPRK shall contribute
to the establishment of a strict system and order in insurance so as to defend
the rights and interests of the insurer and the insured and develop the country’s
economy and stabilize the people’s life.
Article 2. Insurance shall be classified into personal insurance and
The personal insurance shall include life insurance, accident insurance, child’s
insurance and passenger insurance, and the property insurance shall include
fire insurance, marine insurance, agricultural insurance, liability insurance
and credit insurance.
Article 3. The contract of insurance is the basis of insurance activity.
The State shall ensure that the insurer and the insured conclude a contract
of insurance on an equal footing and perform it to the letter.
Article 4. The State shall ensure that insurance business is effected
on the principles of voluntariness, compulsoriness and trustworthiness.
Article 5. Insurance business in the DPRK shall be undertaken by the
State insurance administration institution and insurance companies.
In the special economic zone, foreign investors and overseas Korean compatriots
insurance companies, and foreign insurance companies may set up their representative
offices, branches or agencies.
Article 6. The State shall procure that the institutions, enterprises,
associations and citizens of the DPRK, and the foreign bodies, foreign-invested
businesses and foreign individuals resident in the territory of the DPRK that
are seeking insurance take out policies from the insurance companies in the
territory of the DPRK.
Article 7. The State shall ensure that exchange and cooperation is
promoted with foreign countries and international organizations in the field
Article 8. International agreements on insurance approved by
the DPRK shall take the same effect as that of this law.
Chapter 2. Contract of Insurance
Article 9. The contract of insurance shall be concluded in
writing between the insurer and the insured.
Chapter 3. Personal Insurance
The insured or the person who enters into the contract of insurance for the
insured shall be a contractor of insurance.
Article 10. As agreed in the contract of insurance, the policy holder
shall pay the premium to the insurer and the insurer shall pay the insurance
money or insurance indemnity to the policy holder.
Article 11. The insured shall not make an insurance contract
unless he has an insurable interest. Any insurance contract without the insurable
interest shall not be concluded.
Article 12. Agreement shall be made in the insurance contract on the
1. The name of the insurer,
2. The name and address of the policy holder,
3. The object insured,
4. The value insured,
5. The sum insured
6. The terms of insurance,
7. The duration of insurance and the date of beginning,
8. The premium and the method of its payment
9. The method of insurance compensation, and
10. Other necessary items.
Article 13. At the time of entering
into the contract of insurance the insurer shall provide the standard terms
of contract for the policy holder and explain the contents.
The policy holder shall make a true disclosure to the insurer of information
related to the insurance contract.
Article 14. The insurance contract shall be concluded when
the insurer who has received the application for the insurance contract agrees
to it and issues the insurance policy.
The form of the insurance policy shall be regulated by the State insurance administration
Article 15. Liability for the insurance compensation shall take effect
from the moment when the insurer receives the total or partial amount of the
premium from the policy holder as prescribed in the insurance policy.
The premium, upon the contract, may be paid either by lump sum or in instalments.
Article 16. If the policy holder fails to pay the premium within
the prescribed period of time, the contract of insurance shall cease to be effective.
The insurer may reduce the insurance money or the insurance indemnity pursuant
to the relevant terms of the contract.
Article 17. In case the insurance contract ceases to be effective
owing to the failure by the policy holder to pay the premium as prescribed in
the contract, the policy holder may consult with the insurer to have the contract
come into force again by paying the relevant amount of premium.
In case an agreement cannot be made on the recovery of the contract, the insurer
may cancel the said contract.
Article 18. The insurer and the policy holder may consult and
modify the contract within the term of the contract, except the insurance which
is unmodifiable. The contents shall be clarified in the application for the
insurance contract and the insurance policy.
Article 19. The policy holder, in agreement with the insurer, may cancel
the whole or part of the contract at any time before the insured events occur.
Accident insurance, marine insurance and the like shall not be cancelled.
Article 20. In case the policy holder causes an accident deliberately
or demands insurance compensation on false return, the insurer may cancel the
insurance contract, provided that the premium shall not be refunded.
Article 21. The reinsurance contract shall be concluded upon
the approval of the State insurance administration institution. The reinsurance
contract shall not affect the original insurance contract.
Article 22. The insurance contract that damages the interests of the
society and the collective or that is concluded in an illegal way shall not
The contract concluded after the insured event has taken place shall not take
any effect, either.
Article 23. The insurer may claim compensation to the third party on
the insured event caused by the latter’s faults, provided that the policy holder
submits necessary evidence.
Article 24. The claim for the insurance compensation shall
be made within the period prescribed in the contract.
Article 25. The contract of insurance may be concluded through
a middleman. The middleman shall conclude the contract for the person who wants
to enter into an insurance contract.
Article 26. The insurance middleman shall conduct his business
upon approval of the State insurance administration institution.
The middleman shall be held liable for any loss he has caused to the policy
holder by his fault.
Article 27. The object of personal insurance shall be the
life or body of the insured.
Except the child’s insurance, the persons authenticated to be incompetent in
civil procedure shall not be entitled to enter into a contract of personal insurance.
Article 28. The insurer shall pay the specified amount of insurance
money in case the policy holder of life insurance or child’s insurance is dead.
If the contract expires, the insurer shall make a maturity repayment to the
policy holder who had paid the full amount of premium.
Article 29. Except the policy holder, the person who has the
right of claims for the insurance money, shall be an insured beneficiary.
The insured beneficiary shall be selected by the insured.
Article 30. In case the policy holder covered by the passenger insurance
or accident insurance dies or becomes disabled, the insurer shall pay the appropriate
The relevant medical organ shall examine whether or not the insured is capable
Article 31. In case a person enters into the insurance contract
on condition of another person’s death, the former shall obtain the latter’s
agreement in writing.
The transfer of the right obtained by the insured event to a person other than
the insured shall also necessitate the latter’s agreement in writing.
Article 32. Concerning the insurance concluded on condition
of death, the insurer shall pay the insurance compensation even if the accident
has been caused by the fault of the policy holder or the insured beneficiary.
Article 33. Any replacement of the insured beneficiary shall
be notified to the insurer in writing.
The insurer, upon receiving information of the replacement of the insured beneficiary,
shall specify the fact in the application for the insurance contract.
Article 34. In case several persons are selected as insured beneficiary
the distribution rate of insurance money shall be set individually.
The rate may be set equally on agreement.
Article 35. A death benefit shall be paid to the heir of the policy
holder in the following cases:
1. An insured beneficiary has not been decided on,
2. An insured beneficiary died earlier than the policy holder and no other beneficiary
has been decided on, or
3. Although the insured beneficiary has lost or given up his right of claims
for the insurance money, there is no other beneficiary.
Article 36. The insurer shall not be held liable to pay the
insurance money for the loss and damage caused deliberately by the policy holder.
Concerning the insured events caused deliberately by the insured beneficiary,
the insurer shall not be liable to pay the insurance money.
Article 37. The insurer shall be entitled to receive compensation from
a third party if it has paid insurance indemnity to the insured or to the insured
beneficiary when the policy holder died, became injured or caught a disease
by the fault of the third party.
Chapter 4. Property Insurance
Article 38. The property insurance shall cover the properties
of the institutions, enterprises, organs and citizens. The object of the property
insurance shall be measurable in value.
Article 39. The insured value shall be the maximum limit for the sum
No sum insured shall exceed the insured value.
Article 40. In case one object is insured in more than two
insurances, the total amount of the insurance indemnity shall not exceed the
The policy holder who has had one object in more than two insurances shall inform
his reason to the relevant insurer.
Article 41. The insurer intending to renew the insurance policy
shall reconsult with the policy holder on the object and value insured, specify
them in the application for the insurance contract and reissue the insurance
Article 42. In case the sum insured is lower than the insured value,
the insurer shall be liable for the compensation according to the ratio of the
sum to the value insured. However, any specified agreement in the contract of
insurance shall take effect.
Article 43. The insurer may, according to the insurance contract,
inspect the management by the policy holder of the insured object and its safety
and require to correct the defects revealed.
If the policy holder fails to properly manage the insured object, the insurer
may raise the amount of premium or cancel the contract.
Article 44. If the risk of the insured object or its insured value
decreases, the insurer shall reduce the premium, calculate the amount of premium
during the period of the decrease and give the amount back to the insured.
Any specified items in the contract shall take effect.
Article 45. If the insurer is requested to cancel the contract before
it takes effect, he shall refund to the policy holder the amount of premium
after subtracting the service charge.
In case the insurer is requested to cancel the contract after the term of insurance
begins, he shall refund to the policy holder the amount of money after subtracting
the premium during the relevant period.
Article 46. In case of partial loss of the object insured, except the
insurance that cannot be cancelled during the period of contract, the insurer
may pay the relevant amount of insurance indemnity and cancel the contract,
provided that the policy holder is notified of it.
Article 47. In case the amount of insurance indemnity paid
by the insurer equals to that of the insured value, the right of the policy
holder to the object shall go over to the insurer.
Article 48. In the event of damage caused by a third party, insurer
may pay the insurance indemnity to the policy holder and make a claim for compensation
to the third party within the limit. In case the insured has received compensation
for damage from the third party, the insurer shall pay the insurance indemnity
after subtracting the relevant amount.
Article 49. If the policy holder has given up the claim for
compensation to a third party before the insurance indemnity is paid, the insurer
shall not be held liable for the compensation.
In case the policy holder has given up the claim for compensation to a third
party without agreement with the insurer after the insurance indemnity is paid,
the insurer shall be entitled to be refunded with the amount compensated. If
the claim for compensation has not been exercised to a third party due to a
fault of the policy holder, the insurer may reduce the amount of insurance indemnity.
Article 50. In the event of a damage caused by the policy holder to
a third party in the liability insurance, the insurance indemnity shall be paid
to the third party directly.
The expenses for arbitration and lawsuit related to the damage caused by the
policy holder to a third party shall be borne by the insurer. However, any specific
agreement in the contract shall take effect.
Article 51. The expenses incurred by the policy holder in his effort
to investigate and confirm the cause and scale of accident and prevent the increase
of damage shall be borne by the insurer.
Chapter 5. Insurance Company
Article 52. The approval of establishment of an insurance
company and the license of its business shall be issued by the State insurance
Any insurance company whose establishment has not been approved and whose business
has not been licensed shall not be entitled to undertake operation.
Article 53. The conditions needed for establishing an insurance company
are as follows:
1. Memorandum of association and its internal regulations,
2. Standard terms of the insurance contract and the tariff,
3. Registered funds designated,
4. Place of business and business facilities, and
5. Necessary staff.
Article 54. The institutions, enterprises and associations
intending to set up an insurance company shall first submit for agreement to
the State insurance administration institution the evidentiary documents confirming
that the conditions for establishing the company have been met, the materials
for the possibility of business and the materials related to bank, and then
submit an application for establishing the company.
The form of the application shall be defined by the State insurance administration
Article 55. The State insurance administration institution shall examine
the application for establishing an insurance company and approve or reject
its establishment within 60 days.
If approved, the business licence of the insurance company shall be issued.
Article 56. The insurance company shall register itself within
30 days of the receipt of the business license.
Unregistered insurance companies shall not conduct their business.
Article 57. The business license of the insurance company,
which has not been registered within 3 months of the receipt of the business
license, shall be cancelled.
Article 58. The insurance company intending to set up its agency
or office in the territory of the DPRK shall obtain approval of the State insurance
The agency or office of the company shall be entitled to conduct its business
only after making relevant registration.
Article 59. The insurance company shall conduct its business
within the limits approved by the State insurance administration institution.
In case it wishes to change its name, memorandum, category of business, registered
funds and place of business, it shall obtain approval.
Article 60. The insurance company shall have the minimum capacity
to pay compensation and lay aside insurance fund.
The size of insurance fund and the method of creating the fund shall be set
by the State insurance administration institution.
Article 61. The insurance company may designate its agents
and conduct its business through them. In this case a list of the agents shall
be prepared and the agents be registered.
Article 62. The insurance agent shall conduct business by proxy within
the authority attached by the insurance company and clarify the state of his
business in a document.
The insurance company shall be responsible for its agent’s business.
Article 63. The agent of a life insurance company shall not
be entitled to act for another life insurance company.
Article 64. The insurance company shall properly prepare its business
report, financial statements and profit and loss accounts within 3 months after
the end of a financial year and submit them to the State insurance administration
Chapter 6. Guidance and Control of Insurance Business and Settlement
Article 65. The State insurance administration
institution shall provide guidance and control over insurance activities.
The State insurance and administration institution shall improve the system
and method of guidance for insurance activities in conformity with the demand
of the developing insurance business and properly direct and control the business
activities of the insurance companies.
Article 66. The State insurance administration institution shall work
1. Draw up regulations and directives to carry out the insurance policy of the
State and the Insurance Law,
2. Investigate and analyze the international insurance market and the trend
of the development of insurance and notify the results to the insurance companies,
3. Approve the memorandum, the standard terms of the insurance contract, the
tariff, types of business and their alteration,
4. Define the amount and minimum limit of the registered fund of the insurance
5. Monitor business activities of the insurance company, its branch , office
and agent, and
6. Other activities authorized by the State.
Article 67. The State insurance administration institution shall ensure
that insured events are properly assessed and judged.
The assessment and judgement of insured events shall be conducted only by the
specialized judgement institutions or officials who are qualified by the State.
Article 68. The relevant institutions, enterprises, associations
and insurance companies shall keep the documents and materials concerning insurance
work until the date defined.
Article 69. Penalties shall be imposed on the insurance companies
or their business activities shall be suspended in the following cases:
1. The insurance company has been set up or operated without approval,
2. Unapproved standard terms of the insurance contract or tariff have been applied
or categories of business have been changed without approval,
3. The financial statement or the profit and loss account is not drawn up truthfully
or is fabricated,
4. Compensation has not been made or its amount has been reduced without due
5. The name, memorandum, registered fund or place of business of the insurance
company has been changed without approval,
6. Insurance fund has not been created, or has been used for other purposes
7. The company has been broken up or merged without approval, or
8. The personal insurance has dealt with incompetent persons except children.
Article 70. Penalties shall be imposed on the policy holder
or the insured beneficiary in the following cases:
1. A damage has been caused deliberately and compensation has been made,
2. Indemnity has been made by a false report on the insured event, or
3. More than due indemnity has been made by fabricated documents.
Article 71. Penalties shall be imposed on individual officials of the
insurance company in the following cases:
1. They have instigated the insured , by abusing their power, to go through
the procedures for the claim for compensation without any insurable interest
or justifiable ground and had indemnity made,
2. They have deceived the policy holder or the insured beneficiary, or
3. They have led the policy holder or the insured beneficiary to an illegal
act or colluded with the latter.
Article 72. If the insurance agent or middleman deceives the
insurer, the policy holder or the insured beneficiary, the former shall be fined
or have his business suspended.
Article 73. In the event of serious consequences by the breach of this
law, criminal charges shall be imposed according to the severity of the case.
Article 74. Disputes related to insurance business shall be
settled through consultation.
In case of failure in consultation, they shall be referred to the court and
the arbitration body of the DPRK.
They may be brought to the arbitration body of a third country upon agreement
between the parties concerned.