Roads Quiet Amid COVID... Surprising First Half Performance of Sonbosa Insurance Companies

Improvement in Loss Ratio Due to Reduced Vehicle Usage

The area around Sejong-daero in Seoul is quieter than usual on the 8th, during the summer vacation season. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Oh Hyung-gil] Non-life insurance companies posted soaring earnings in the first half of the year. Since the COVID-19 outbreak, automobile usage and hospital visits have decreased, stabilizing loss ratios. In the second half, seasonal factors such as typhoons and the easing of social distancing along with COVID-19 vaccinations are expected to cause a partial rebound in automobile and long-term loss ratios.

According to the insurance industry on the 14th, Samsung Fire & Marine Insurance recorded a net profit of 744.1 billion KRW in the first half of this year, a 71.7% increase compared to the same period last year. The combined ratio (the sum of loss ratio and expense ratio), which indicates insurance business efficiency, improved by 2.9 percentage points from the first half of last year to 101.5%, due to efficiency improvements across all sectors and better automobile insurance loss ratios.

By category, the automobile insurance loss ratio decreased by 5.2 percentage points from the previous year to 79.0%, thanks to a temporary reduction in accidents and efforts to reduce loss ratios. General insurance recorded a loss ratio of 72.5%, down 8.7 percentage points due to a decrease in high-cost claims in the second quarter.

Hyundai Marine & Fire Insurance posted operating profit and net profit of 368 billion KRW and 249 billion KRW respectively in the first half. These figures represent increases of 35.0% and 35.5% compared to the first half of last year. Premium income (gross written premium) rose 6.2% year-on-year to 7.5569 trillion KRW. The combined ratio improved by 2.5 percentage points from the first half of last year to 103.5%.

In particular, the general insurance loss ratio improved by 10.7 percentage points year-on-year to 57.5%. Automobile insurance also saw a 4.2 percentage point improvement to 78.6%, supported by continued rate hikes and efforts to reduce loss amounts. The long-term insurance loss ratio slightly increased to 86.2% due to increased medical utilization compared to the previous year.

A Hyundai Marine & Fire Insurance official said, "The trend of improving loss and expense ratios is expected to continue for the time being. Especially, the steady growth trend of new long-term insurance contracts, which can significantly contribute to net profit increases with the introduction of IFRS17, is expected to continue in the second half."

DB Insurance’s first-half sales reached 7.4329 trillion KRW, up 7.7% year-on-year, and net profit increased by 21.9% to 425.6 billion KRW. This is attributed to improvements in automobile insurance loss ratios and efforts to reduce expenses.

A DB Insurance official stated, "Strengthened social distancing due to COVID-19 temporarily improved automobile loss ratios, and improvements in long-term and general insurance loss ratios increased operating profit. Additionally, efforts to reduce expenses led to an improvement in the expense ratio in the second quarter, resulting in excellent performance."

Meritz Fire & Marine Insurance’s first-half sales rose 10.1% year-on-year to 4.9337 trillion KRW, and net profit increased 36.8% to 291.9 billion KRW during the same period.

The combined ratio was 100.7%, down 6.2 percentage points from the same period last year. A Meritz Fire & Marine Insurance official explained, "Net profit increased through continuous sales growth and cost efficiency."

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