"Fear of Novel Coronavirus Keeps People from Hospitals" Insurers See Potential for Loss Ratio Improvement

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] An analysis has emerged suggesting that the loss ratio of non-life insurance companies, which has risen due to the spread of the novel coronavirus infection (Wuhan pneumonia), may improve.

On the 7th, Jeong Tae-jun, a researcher at Yuanta Securities, stated in a report, "Due to the fear of the novel coronavirus, the rate of increase in incurred losses for non-life insurance has slowed, making it highly likely that the annual loss ratio will improve," adding, "This is expected because hospital visits and vehicle usage are anticipated to decrease similarly to the period from May to December 2015 during the Middle East Respiratory Syndrome (MERS)."

According to the report, during the MERS period, the long-term loss ratios and automobile loss ratios of Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and others continued to improve compared to the previous year, and the growth rates of long-term insurance losses and automobile losses also showed a declining trend.

Researcher Jeong diagnosed, "Last year, the main causes of the deterioration in loss ratios were the rapid increase in loss amounts compared to the past and the insufficient rate hikes in premiums. Earlier this year, the rate hikes also fell short of expectations, and there was no certainty about the slowdown in the increase of incurred losses, which caused the stock prices of non-life insurers to weaken significantly."

He further predicted, "If we enter a phase where the possibility of loss occurrence itself decreases, as was the case during MERS, it could help improve the annual loss ratio."

However, he added, "The mortality rate of the novel coronavirus is about 2%, which is significantly lower than that of MERS, and the number of confirmed cases domestically is increasing at a slower pace than during MERS, so there is also a possibility that the fear sentiment could recover earlier than it did during MERS."

This content was produced with the assistance of AI translation services.