Korean car insurance premiums expected to rise average 3.5% this year

2020.01.14 14:03:29 | 2020.01.14 14:52:46

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South Korean non-life insurers are raising premiums for their car policies starting this month by an average of 3.5 percent to offset increasing losses from the higher loss ratio.

According to industry sources on Monday, Korea’s four major non-life insurers have set their new auto insurance rates – KB Insurance up 3.5 percent (from Jan. 29), DB Insurance up 3.4 percent (from Feb. 3), Hyundai Marine & Fire Insurance up 3.5 percent (from Feb. 5), and Samsung Fire & Marine Insurance up 3.3 percent (date undecided).

Smaller firms also are readying to follow suit. Lotte Insurance is expected to raise it by 3.5 percent by mid-February. Others including Meritz Fire & Marine Insurance, Hanwha General Insurance, Heungkuk Fire & Marine Insurance, MG Non-Life Insurance, The-K Non-Life Insurance, and AXA General Insurance are preparing higher rates from next month.

Last year, auto insurers hiked premiums in January and June due to their higher loss ratio, mostly made from costs for piled-up medical bills and car maintenance fees. The loss ratio, representing the ratio of losses to premiums earned, can be an indicator of the insurer’s financial distress.

Most firms posted a loss ratio of over 100 percent in December alone – Samsung Fire & Marine Insurance 100.1 percent, Hyundai Marine & Fire Insurance 101.0 percent, DB Insurance 101.0 percent, and KB Insurance 100.5 percent.

Cumulative operating loss of the country’s non-life insurers reached 1.29 trillion won ($1.12 billion) in total for the first 11 months of last year and the loss for full 2019 is forecast to exceed a record high of 1.53 trillion won in 2010.

Actual losses could go higher, considering various operating costs to pay, industry observers predicted.

By Lee Seung-hoon and Lee Ha-yeon

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