Stable Auto Insurance Loss Ratio in August Due to COVID-19... Insurance Industry Warns of Possible Deterioration in Second Half

Top 4 Companies' Auto Insurance Loss Ratios Below 80% from January to August Show Stability
Industry "Concerns Over Performance Decline in Second Half Due to Accident Frequency Regression and Increased Loss per Claim"

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] The loss ratio for automobile insurance in August improved compared to the previous month. This is due to a decrease in vehicle traffic as the nationwide Level 4 social distancing measures were expanded amid the fourth wave of COVID-19. However, the industry expects that with the phased implementation of With-Corona starting in October, the number of accidents is likely to return to pre-COVID-19 levels, which may lead to a deterioration in performance again.

According to the non-life insurance industry on the 7th, the August automobile insurance loss ratio for the top four companies?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance?which account for 85% market share, was tentatively estimated at 77.0% to 78.0%. The cumulative loss ratio for August also recorded below 80%, ranging from 78.2% to 79.4%. The automobile insurance loss ratio (combined loss ratio) refers to the ratio of insurance claim payments to total premium income. Considering operating expenses, the 80% level is known to be the breakeven point.

Besides the top four companies, Hanwha General Insurance and Meritz Fire & Marine Insurance also showed stable loss ratios in August at 78.4% and 74.1%, respectively. Lotte Insurance, Heungkuk Fire & Marine Insurance, and Hana Insurance recorded loss ratios between 83.0% and 84.7%. MG Insurance recorded the highest loss ratio among insurers at 91.4%, which is a 39.4 percentage point decrease from the previous month’s 130.8%.

Despite the vacation season, the industry analyzed that the decline in the August loss ratio was due to the continued impact of COVID-19, which led to reduced vehicle traffic and consequently fewer accidents, stabilizing the loss ratio.

However, there are concerns that performance will worsen in the second half of the year. With the phased implementation of With-Corona starting in October, the number of accidents is likely to return to pre-COVID-19 levels, and recently, the loss amount per victim has been increasing. In fact, the per capita automobile loss amount for the top four companies was 3.5% (?120,000) higher in August compared to the previous year, reaching ?3.5 million. The average annual growth rate since 2018 is about 8.1%.

An industry official said, "The loss amount per victim is continuously increasing due to factors such as rising costs for oriental medicine treatments. Despite the temporary improvement in performance due to the decrease in the number of accidents, there are concerns about worsening performance in the second half of the year due to cost increase factors such as repair industry’s demands for higher maintenance fees."

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