As the Monsoon Ends, a Record-Breaking Typhoon Approaches... Non-Life Insurance Companies on High Alert

Flooding and Mass Death Expected to Cause Damage Worth Hundreds of Billions of Won
Loss Ratio Likely to Surge Again in the Second Half of the Year

[Asia Economy Reporter Oh Hyung-gil] Following record-breaking heavy rains that caused flooding of vehicles and farmland, destruction of crops and livestock, resulting in damages worth thousands of billions of won, the unprecedented typhoon 'Bavi' is approaching, putting the property insurance industry on high alert.

As recovery efforts are underway, additional damage is inevitable due to the typhoon bringing heavy rain and strong destructive winds. It is expected that the loss ratio of property insurance companies will surge in the second half of the year when full-scale compensation begins.

According to the property insurance industry on the 26th, the number of crop disaster insurance claims due to this heavy rain exceeded 60,000 as of the 24th.

By item, rice accounted for the largest number with about 30,000 cases. Horticultural facilities accounted for about 7,000 cases, and pears about 3,000 cases.

The damaged area reached a total of 25,005 hectares. This is nearly 41% of the area of Seoul (60,502 hectares).

Livestock disaster insurance also received 221 damage claims, including 139 cases for poultry, 45 for pigs, and 29 for cattle. In particular, numerous landslides caused by the heavy rain have led to over 60 reported damages related to solar power generation so far.

Although the official damage amount has not been released, it is estimated to be as high as thousands of billions of won.

Currently, relevant government departments and NongHyup Property & Casualty Insurance are working on estimating the specific scale of the damage, but it is reported that fieldwork is facing difficulties due to the resurgence of COVID-19.

[Image source=Yonhap News]

Property Insurers That Held Up Well in the First Half Face Sharp Rise in Loss Ratios in the Second Half

Flood damage to vehicles caused by the heavy rains is also snowballing. From the 9th to the 19th of last month, the General Insurance Association collected reports from insurers of vehicles that were flooded, totaling 9,123 vehicles. The damage alone amounts to 86.5 billion won.

Although the damage scale is less than that of the 2011 heavy rain (damage amount 99.3 billion won) or the 2003 typhoon 'Maemi' (91.1 billion won), the industry expects it to increase further.

The problem is that Typhoon No. 8 'Bavi', accompanied by strong winds of 60 meters per second, is additionally hitting the Korean Peninsula. It is expected that the entire country will fall under the typhoon's influence as Bavi passes over the West Sea on the 27th of this month.

Property insurers are concerned that the loss ratio, which had been stable, will rise again due to this worsening weather. The automobile insurance loss ratio in the first half was 84.3%, down 3.2 percentage points from the same period last year.

This is due to reduced driving and accidents caused by COVID-19. The loss amount for automobile insurance also decreased significantly from 418.4 billion won in the first half of last year to 125.4 billion won, a reduction of 293 billion won.

A property insurance industry official said, "If flood damage to automobiles, houses, and farmland worsens due to the heavy rain followed by the typhoon, the loss ratio will deteriorate significantly not only for automobile insurance but also for general insurance," urging, "Please take special precautions such as inspecting facilities and being careful when driving."

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