September Auto Insurance Loss Ratio Worst Since COVID-19... "Social Distancing Had No Effect"

Four Major Non-Life Insurers Average 86% in September
Accidents Do Not Decrease Despite Strengthened Social Distancing
Rather Increase Compared to July-August Flood and Wind Damage

[Asia Economy Reporter Ki Ha-young] Last month, the loss ratio for automobile insurance recorded the highest level since March, when the novel coronavirus disease (COVID-19) began to spread in earnest. This is interpreted as indicating that despite the strengthening of social distancing measures during the second wave of COVID-19, there was no reduction effect on car accidents.

According to the non-life insurance industry on the 13th, the average automobile insurance loss ratio for September (preliminary closing) among four major non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance?was 86.2%. The loss ratio refers to the ratio of insurance claims paid out relative to the premiums collected from customers. A loss ratio of 100% means that the money received from customers was paid out entirely to them. The appropriate loss ratio for automobile insurance is considered to be around 78?80%, taking into account management expenses and profits.

Last month’s loss ratio was even higher than in July and August, when the worst vehicle flood damage in history occurred. The average loss ratio for the four companies in August was 85.4%, which is 0.8 percentage points lower than in September. This is interpreted as a result of increased vehicle movement due to more outdoor activities compared to August, when heavy rains persisted during the monsoon season.

Among the four companies, Samsung Fire & Marine Insurance, DB Insurance, and KB Insurance recorded their highest loss ratios since March, when COVID-19 began to spread in earnest. Samsung Fire & Marine Insurance’s loss ratio rose by 1.3 percentage points from the previous month to 86.4%, while DB Insurance and KB Insurance increased by 1.5 percentage points and 0.7 percentage points, respectively, to 87% and 86%. On the other hand, Hyundai Marine & Fire Insurance’s loss ratio decreased by 0.3 percentage points from the previous month to 85.5%.

In March, when social distancing was strengthened following the spread of COVID-19, the average loss ratio of the four major companies improved to 77.8%. This was due to reduced vehicle movement from social distancing and fewer hospital treatments for minor injuries. The average premium increase of 3.3?3.5% by each company at the end of January also contributed to the decline in the loss ratio.

The cumulative loss ratio from January to September improved compared to the previous year. Samsung Fire & Marine Insurance recorded 84.8%, Hyundai Marine & Fire Insurance 84.6%, DB Insurance 84.1%, and KB Insurance 84.1%, showing an improvement of 3.3 to 4.9 percentage points compared to the same period last year.

As the loss ratio is being managed stably, the losses incurred by non-life insurers from automobile insurance are also expected to decrease. The industry estimates that a 1 percentage point improvement in the loss ratio corresponds to a reduction of about 150 billion KRW in losses.

An industry official said, "Due to the prolonged COVID-19 pandemic, the loss ratio is still being managed at a stable level. However, the loss ratio is gradually worsening, and since it tends to increase in winter due to heavy snowfall and other factors, the loss ratio may rise."

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