In early 2021 North Korea introduced property and life insurance designed to appeal to the many newly prosperous “dojun” (entrepreneurs) as well as government employees who have grown wealthy by extracting bribes from an increasingly desperate population. Local officials see this as a new way to “tax” property owners without calling it a tax. Local officials participate in getting people to sign up for what they insist is mandatory insurance for personal property. The premiums are high, the benefits are low and there a lot of loopholes that enable the state-owned insurance company to avoid paying a claim. The program was officially legalized in early March by the Supreme People's Assembly, the government-controlled legislature that consists of members approved by the ruling Workers Party and the Kim family.
When you read the policy conditions it becomes apparent that the property and life insurance offerings appear to be more of another government grift, a scheme designed to extract the maximum amount of money from victims without much risk to the grifter. Since a government owned insurance company is providing the new insurance offerings, no one is going to be prosecuted for any crime. The fine print reveals that the government has many opportunities to cheat. For example, no benefits are paid if anyone dies while committing an illegal act or because of gross negligence. No payments are made if the death occurs during a military action or because of radiation poisoning. Worse, claims must be filed quickly and this involves getting the local bureaucracy to process needed documents quickly enough to meet the deadline. The government can also charge a claimant with a crime, which also invalidates claims.
Local officials are usually given quotas for programs that depend on voluntary participation. The local officials keep their jobs, and the ability to extract bribes, by meeting these quotas. Since the 1990s the government has depended more on “voluntary contributions” from North Koreans several times a year. This is usually in the form of free labor for construction projects or providing additional agricultural labor during harvest time. On other occasions the contribution is in goods or cash. This type of tax collection is an ancient practice the disappeared during the Industrial Revolution when there were larger GDPs and more cash to collect from the greater number of wealthy entrepreneurs and the growing number of educated professionals. Initially many governments handled tax collection through the use of “tax farmers” who purchased a license to collect taxes in a certain area and deliver a certain amount to the government. Anything additional the tax farmers collected they would keep. This system did not work as well during the pre-industrial revolution period because more of the wealth was concentrated in noble, or just rich, families that retained lots of armed men and lawyers to deal with threats like royal tax farmers. In North Korea the age of tax farming is alive and thriving with things like rigged insurance policies.
South Korea went through the industrial revolution in the last fifty years, China did so in the last forty years. North Korea is still stuck with a medieval economy with GPD to match and an obsession with raising enough money to build nuclear weapons and ballistic missiles to deliver them. With these weapons North Korean leaders believe they can extort more cash and goods from wealthier neighbors.
Few people realize how poor North Korea is. Over 90 percent of the North Korean economy is state owned and like most communist states there is no income tax because there is so little to tax. South Korea has a GDP that is 55 times larger than North Korea. Adjusted for population, South Korea has more than 25 times more GDP per capita. To make matters worse North Korea spends about a third of GDP on defense compared to about three percent for South Korea.
It was interesting that radiation poisoning was listed as something that cannot be collected on. Officially there is no radiation problem in North Korea. Yet in 2018 North Korea officially closed its troubled (by tunnel collapses and radiation leaks) nuclear test site in the northeast at Kilju (North Hamgyong Province). This area is on the Chinese border. The province is largely rural and undeveloped, one reason for putting the nuclear test site there. But before the Kilju site was officially shut down, with foreign reporters, but not any foreign nuclear experts, present the government carried out a quiet effort to move anything of value, including some items that were not really portable (structures).
In late 2017 some 200 North Korean soldiers and family members were being treated for radiation poisoning at the Punggye-ri nuclear facility. Chinese radiation monitors on the North Korean border recorded levels were up seven percent a week after the September 3rd underground nuclear test and were apparently much higher in North Korea. This data was released because the Chinese population along the border know that they face some health risks if radiation levels increase too much for too long. Earlier in October 2017 there was a tunnel construction accident in Mantapsan Mountain near Punggye-ri. A hundred workers were trapped but they died, along with about a hundred tunnel workers sent to rescue them when a second collapse occurred. This all makes the nuclear weapons program appear to be a threat to North Koreans as well.
On September 12, 2017 Chinese radiation monitors on the North Korean border recorded levels were up seven percent since the September 3rd test and have appeared to have peaked. This data was released because the population along the border know that they face some health risks if radiation levels increase too much for too long.
Chinese insurance companies, unlike the North Korean one, will pay when radiation sickness is a cause of death.