"Even with a 13% Annual Increase in Indemnity Insurance Premiums, Cumulative Deficit Reaches 113 Trillion Won After 10 Years"

Insurance Research Institute, Trends in Indemnity Insurance Funeral Expenses
"Accelerated Management Crisis → Mass Bankruptcy of Insurers"

[Asia Economy Reporter Oh Hyung-gil] Even if premiums for indemnity medical insurance are raised by 13% annually, it is projected that the cumulative deficit over the next 10 years will reach 113 trillion won. It warned that the massive deficit could trigger a crisis such as mass bankruptcies of insurance companies.

According to the Korea Insurance Research Institute on the 15th, the average annual increase rate of indemnity insurance premiums over the past four years from 2017 to last year was 13.4%, but the increase rate of insurance claims reached 16.0%.

If this trend continues until 2031, the cumulative deficit of indemnity insurance is expected to reach 112.3 trillion won. It will increase to 3.9 trillion won in 2022, 8.9 trillion won in 2026, five years later, and 22.9 trillion won in 2031.

During the same period, the loss ratio is also expected to rise to 135.3% in 2022, 148.4% in 2026, and soar to 166.4% in 2031.

The institute suggested, "To achieve the risk loss ratio of 100%, which can be considered the breakeven point, risk premiums must be increased by 19.3% annually during this period."

It added, "If premiums cannot be raised, losses from indemnity insurance alone in the non-life insurance industry will reach 6.2 trillion won in 2025, causing non-life insurers to turn to net losses," emphasizing, "The crisis of indemnity insurance will spread to a sustainability crisis for the entire insurance industry."

The institute also stated, "If the management crisis accelerates, leading to net losses for insurers, the unprecedented event of mass bankruptcies of insurance companies cannot be ruled out," adding, "It is also feared that significant social costs, including damage to good-faith policyholders and losses to the Deposit Insurance Fund, will occur."

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