April Old-Model Indemnity Insurance Rates Rise... Up to 19%

8.7 Million GuSilsun Sold Until September 2009
Samsung Fire & Marine Insurance Up 19%, Major Non-Life Insurers Up 15-17%

[Asia Economy Reporter Ki Ha-young] Insurance premiums for old-type indemnity insurance are expected to increase by up to 19% this April.

According to the industry on the 19th, Samsung Fire & Marine Insurance announced in its earnings conference call yesterday that it will raise premiums for old-type indemnity insurance to the industry's highest level of 19%. A Samsung Fire & Marine Insurance official said during the conference call, "This year, we will increase the old-type indemnity insurance rate by 19%, the largest increase in the industry, and achieve loss ratio stabilization through rate normalization."

Old-type indemnity insurance is a product that was sold until September 2009 and then discontinued, with 8.67 million contracts as of the third quarter of last year. After that, standardized indemnity insurance and new indemnity insurance (after April 2017) followed.

Other major insurers besides Samsung Fire & Marine Insurance are also expected to raise old-type indemnity insurance premiums by about 15-17%. Earlier, in December last year, the Financial Services Commission suggested reflecting about 80% of the increase rate desired by insurers for old-type indemnity insurance. Premiums for standardized indemnity insurance, which came after old-type indemnity insurance, rose by 10-12% by company last month, while new indemnity insurance premiums were frozen.

Although indemnity insurance is a private insurance, it has the nature of a national insurance with 34 million individual subscribers (excluding group policyholders). Accordingly, the opinions of financial authorities have a decisive impact on premium increase rates.

The financial authorities' approval of nearly a 20% premium increase for Samsung Fire & Marine Insurance points to the severity of the loss ratio in indemnity insurance. In 2019, the 'risk loss amount' of indemnity insurance was 2.8 trillion won, and the 'risk loss ratio' recorded 133.9%. The insurance industry projected that the risk loss ratio would exceed 130% based on the trend up to the third quarter last year and argued that premiums must be raised to the legal maximum increase rate (25%) to break even.

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