As COVID-19 Spread Slows... April Vehicle Loss Ratio Rises Again

Slight Rebound as of Late April Closing
Concerns Over Worsening Loss Ratio in May During Outing Season

[Asia Economy Reporter Ki Ha-young] The loss ratio of automobile insurance among major non-life insurance companies slightly rebounded last month. This is attributed to the increase in vehicle movement as the spread of the novel coronavirus infection (COVID-19) eased. There is also analysis that the improvement in the loss ratio was only a temporary effect in March.

According to the insurance industry on the 8th, the automobile insurance loss ratio (preliminary closing) of major non-life insurers such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance at the end of April averaged 80.38%, slightly rising compared to the previous month. The average loss ratio, which was 78.46% as of the end of March, increased by 1.92 percentage points.

By company, Samsung Fire & Marine Insurance recorded 80.0%, Hyundai Marine & Fire Insurance 79.5%, DB Insurance 81.5%, KB Insurance 82.0%, and Meritz Fire & Marine Insurance 78.9%. Compared to March, KB Insurance increased the most by 6.7 percentage points, Samsung Fire & Marine Insurance rose by 3.8 percentage points, and DB Insurance increased by 1.5 percentage points. On the other hand, Hyundai Marine & Fire Insurance decreased by 0.2 percentage points, and Meritz Fire & Marine Insurance decreased by 2.2 percentage points.

The industry views that the increase in vehicle movement as the spread of COVID-19 slowed down influenced the rise in the loss ratio. An industry official said, "The atmosphere of refraining from going out due to COVID-19 in March gradually changed in April," adding, "There were holidays in April, so it is presumed that traffic to the outskirts increased."

Generally, the appropriate loss ratio for automobile insurance is around 77-80%. The loss ratio refers to the ratio of insurance claims paid to policyholders out of the premiums received by the insurer. If an insurer receives 1 million KRW in premiums and pays 700,000 KRW in claims, the loss ratio is 70%.

Another industry official expressed concern, saying, "With social distancing transitioning to everyday distancing and May being a representative season for outings, the automobile insurance loss ratio may worsen further in May."

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