November Auto Insurance Loss Ratio Soars... "Is Achieving Surplus Becoming More Difficult?" (Comprehensive)

Loss Ratios of Major 4 Non-Life Insurers' Auto Insurance
Preliminary Estimates at 85.5~87.4%
Concerns Over Loss Ratio Deterioration Due to Repair Cost Increase and Heavy Snowfall

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] Since the phased return to normal life (With Corona) began last month, the increase in mobility has caused automobile insurance loss ratios to soar. Although the loss ratio had been stably managed below 80%, raising expectations for automobile insurance profits, concerns are emerging that if the number of accidents rises and returns to pre-COVID-19 levels, performance could deteriorate again.

According to the non-life insurance industry on the 16th, the automobile insurance loss ratios of the top four non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance?were tentatively estimated at 85.5% to 87.4% last month. These four companies, which hold about 85% market share, had loss ratios of 79.5% to 84.0% in October. In just one month, the upper end rose by 3.4 percentage points and the lower end by 6 percentage points.

Samsung Fire & Marine Insurance's loss ratio surged 7 percentage points from 79.5% in the previous month to 86.5%. During the same period, Hyundai Marine & Fire Insurance also jumped 5.1 percentage points from 82.3% to 87.4%. DB Insurance and KB Insurance recorded 85.5% and 87.0%, respectively, rising 4.7 and 3 percentage points compared to the previous month.

However, the cumulative loss ratio up to November is still being managed around 80%. Samsung Fire & Marine Insurance stands at 80.1%, Hyundai Marine & Fire Insurance at 80.5%, DB Insurance at 78.9%, and KB Insurance at 80.2%. Compared to the end of last year (84.4% to 85.6%), this is nearly 5 percentage points lower.

This deterioration in loss ratios is interpreted as being influenced by increased mobility due to With Corona. In fact, the average daily number of automobile accidents in November, when With Corona began, was 21,485, which is 1,579 more than the 19,906 in October.

Considering operating expenses, a loss ratio of around 80% is known to be the breakeven point. Because of this, expectations for automobile insurance profits this year were high, but with last month's soaring loss ratios, concerns about worsening performance have arisen. In particular, from the 1st of this month, the average repair cost was also raised by 4.5%, adding another factor worsening the loss ratio. Over the past 10 years, the only year with operating profits in automobile insurance was 2017 (26.6 billion KRW).

An industry official said, "Due to seasonal factors such as heavy snowfall, loss ratios tend to spike in winter," adding, "If the number of accidents continues to rise and returns to pre-COVID-19 levels, the performance of automobile insurance could deteriorate again."

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