"'Nailong Patients' Discharge Decline Raises Infection Concerns, Hospitals Hesitate... Insurers See Sharp Drop in Loss Ratio in January '↓'"

January Auto Insurance Loss Ratio Significantly Decreases... Four Major Insurers Improve by Over 10%
Reduction in Fraudulent Patients and Contagion Concerns Lead to Decline in Mild Traffic Accident Hospitalization Rates

[Asia Economy Reporter Ki Ha-young] Non-life insurance companies are unexpectedly benefiting as loss ratios have significantly dropped due to the spread of the novel coronavirus infection (COVID-19). This is because the number of 'nai-ronh patients'?those who get hospitalized to claim insurance money even for minor traffic accidents?is decreasing, and people are avoiding hospital visits altogether due to concerns about secondary infections, leading to a reduction in medical expense claims. It is expected that the loss ratio will noticeably decrease in February, when COVID-19 began to spread in earnest.

According to Samsung Securities and the non-life insurance industry on the 28th, the average auto insurance loss ratio of four non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and Meritz Fire & Marine Insurance?in January was 89.4%, improving by more than 10% compared to the previous month’s 101.3%. Even considering seasonality factors such as increased vehicle operation at the end of the year and the reserve for incurred but not reported losses (IBNR), the market evaluates this as a remarkable improvement.

In fact, during the Middle East Respiratory Syndrome (MERS) outbreak in 2015, the reduction in vehicle operation and hospital visits led to an overall decrease in loss ratios. MERS spread for three months after the first domestic case was reported in May 2015.

Researcher Jang Hyo-seon of Samsung Securities analyzed, "The main reasons are the full reflection of the rate increase effect from early last year and the decrease in vehicle operation and minor accident hospitalizations due to the spread of the COVID-19 virus."

Accordingly, the loss ratio in February, when the number of confirmed cases began to rise significantly, is expected to have improved even more. The effect of improved long-term risk loss ratios due to reduced excessive medical treatment is also expected to be reflected in performance with a lag of one to two months.

Researcher Jang estimated that the spread of the epidemic has also led to a reduction in face-to-face sales activities by insurance agents, which will ultimately result in a decrease in additional amortization costs for new contracts?a major burden on non-life insurers’ performance last year. With the planned interest rate cut in April, the marketing efforts expected in March have worsened due to reduced agent activities, raising expectations for improved expense ratios within the year.

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