Emergency Dispatches Surge Due to Cold Wave and Heavy Snow... Will Auto Insurance Loss Ratios Increase?

Increase in Accidents and Battery Discharges
50,000 Accident Reports in Just 3 Days

Due to the Arctic cold wave, the lowest temperature in Seoul dropped to minus 16 degrees Celsius, prompting a cold wave warning. On the 7th, vehicles were moving slowly like turtles on the roads of Yeouido, Seoul, due to the heavy snowfall overnight. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Oh Hyung-gil] As the new year begins, insurance companies are on high alert due to an Arctic cold wave causing the perceived temperature to drop below minus 20 degrees Celsius, combined with heavy snowfall.

With an increase in vehicle accidents on icy roads and sudden heavy snow and rapid temperature drops, emergency towing and battery discharge incidents have surged, leading to a spike in automobile accident reports and emergency dispatch service usage.

As the severe cold wave is expected to continue until next week, it is anticipated that the scale of damage for insurance companies will also increase. There are concerns that the automobile insurance loss ratio, which had stabilized during the COVID-19 pandemic, will be adversely affected.

According to the Korea Insurance Development Institute on the 8th, from the 4th to the 6th, the number of automobile insurance accident reports received by 11 domestic insurance companies reached approximately 49,000 cases in just three days. On the 6th, when heavy snow fell, there were 17,136 cases reported in one day, an increase of about 2,400 cases compared to the previous day (14,782 cases).

During the same period, the number of emergency dispatch service cases also reached about 243,000. Due to battery discharges caused by the cold wave, emergency dispatch requests for battery charging accounted for more than half, totaling approximately 159,000 cases over three days. Emergency towing cases also reached about 52,000.

An industry insider explained, "Accidents increased as heavy snow suddenly fell during the evening rush hour when vehicle operation increases, and many customers requested emergency dispatch services due to battery discharges."

With the surge in accidents and emergency dispatch service usage caused by the cold wave and heavy snow, attention is focused on how much this will impact the automobile insurance loss ratio. From January to November last year, the cumulative automobile insurance loss ratio of nine domestic insurance companies ranged from 81.5% to 106.1%, a decrease compared to the previous year's same period loss ratio of 87.5% to 118.3%.

By insurance company, Samsung Fire & Marine Insurance's loss ratio dropped by 5.0 percentage points from 90.2% in 2019 to 85.2% last year. DB Insurance decreased from 90.6% to 84.4%, Hyundai Marine & Fire Insurance from 90.8% to 84.8%, and KB Insurance from 91.2% to 84.5%, each reducing by about 5 to 6 percentage points.

This is due to reduced vehicle usage and fewer hospital visits as people stayed home more because of social distancing measures implemented during COVID-19. However, these figures are still higher than the appropriate loss ratio range of 77% to 80%.

An insurance industry official said, "Although the loss ratio improved last year, it only means losses decreased; the chronic deficit situation remains," adding, "It is also cautious to mention premium increases due to the COVID-19 rebound effect."

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