South Korean non-life insurers benefited big last year from a surge in car insurance premiums on pent-up demand for luxury import cars.

According to industry sources on Thursday, Korea’s top five non-life insurers –Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance and Meritz Fire & Marine Insurance – reported a combined 18.89 trillion won ($16.82 billion) in premium revenue through credit card payments last year.

Premium payments by plastics have been on a rise from 14.58 trillion won in 2018 to 16.20 trillion won in 2019. For the first three months this year, the credit card payments expanded by 10.2 percent on year to total 4.89 trillion won.

The ratio of credit card payment in total premium also has risen from 26.2 percent in 2018 to 27.7 percent in 2019 and 30.3 percent in 2020.

Nearly 70 percent of credit card payments to non-life insurers are for car policies in general. A rise in car policy premiums has led to an increase in overall credit card payment to non-life insurers. Premiums for car policies rose for two consecutive years until last year, with an average annual growth of 5 percent.

In 2020, sales of expensive import cars expanded as homebound rich Koreans during the pandemic restrictions went on a spending spree. Import car sales jumped to record 286,685 units in 2020, up 15.9 percent on year, according to the Korea Automobile Importers and Distributors Association (KAIDA).

Auto insurance rates for import cars are nearly 3.6 times higher than those for domestic brand vehicles.

Online insurance purchases also are rising fast to increase credit card payment. Auto insurance purchases on non-contact channels in 2020 took up 43.3 percent of all in 2020, up from 37.6 percent in 2018.

By Lee Seung-hoon and Lee Ha-yeon

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