Maintenance costs are rising... Is an increase in car insurance premiums possible?

At a repair shop, maintenance is being performed on the engine and coolant for summer vehicle care.

[Asia Economy Reporter Oh Hyung-gil] The loss ratio of automobile insurance, which has been stabilizing due to COVID-19, is expected to rise again this year. Insurance companies are expressing concerns over the automobile repair industry's demand to increase repair service fees.

The repair industry is reportedly demanding an 8.2% increase in repair service fees. At the tripartite working-level meeting of the Automobile Insurance Repair Council held on the 5th, the repair industry submitted a proposal to raise repair service fees to the Ministry of Land, Infrastructure and Transport.

The Automobile Insurance Repair Council is a consultative body that determines automobile insurance repair charges, composed of five members each from the insurance industry, repair industry, and public interest representatives, according to the revised Automobile Damage Compensation Guarantee Act implemented in October last year.

The repair industry also submitted the repair service fee issue as an agenda item to the 'Euljiro Committee,' a policy body of the Democratic Party of Korea focused on protecting socially vulnerable groups. They argued that three years have passed since the last increase and announcement, during which labor costs and other cost factors have risen.

If repair service fees increase as demanded by the repair industry, it will act as a factor for raising automobile insurance premiums. With financial authorities effectively blocking automobile insurance premium hikes, an increase in repair service fees alone could lead to a rise in the loss ratio.

According to the insurance industry, despite premium increases last year and reduced mobility due to COVID-19, automobile insurance operating losses are estimated to have reached 380 billion KRW.

An insurance company official said, "With authorities holding a negative view on automobile insurance premium increases this year, if only repair service fees rise, it could lead to an increase in the loss ratio," adding, "The scale of automobile insurance operating losses may expand."

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