As COVID-19 cases surge and oil prices soar... Car insurance loss ratios drop further

[Asia Economy Reporter Changhwan Lee] This year, the loss ratio of automobile insurance among major domestic non-life insurance companies has significantly decreased. This is the result of reduced vehicle usage due to the surge in COVID-19 cases and the sharp rise in oil prices. Expectations are rising that the first-quarter performance of non-life insurers will improve substantially.

According to the non-life insurance industry on the 21st, the average automobile insurance loss ratio of 11 major domestic non-life insurers last month closed at 79.3%. This is a 5.4 percentage point decrease compared to 84.7% in the same period last year.

The average loss ratio in January was also improved at 84.5% compared to 87.7% in the same period last year, and the decline widened further in February. Looking at the loss ratios by company last month, Meritz Fire & Marine Insurance recorded 71%, KB Insurance 75.8%, Samsung Fire & Marine Insurance 76%, Hanwha General Insurance 76.4%, and DB Insurance 78%, among others.

The significant drop in automobile insurance loss ratios is interpreted as being due to a sharp decrease in vehicle usage following the rapid spread of the Omicron variant this year.

The sharp rise in international oil prices after Russia's invasion of Ukraine is also cited as a cause for the reduction in vehicle usage. The average international oil price in February, based on Dubai crude, rose 10.7% compared to the previous month. As a result, gasoline prices exceeded 2,000 won per liter.

An industry official explained, "This year, due to the surge in COVID-19 patients caused by the Omicron variant and the rise in fuel prices, vehicle usage has decreased. Consequently, traffic accidents have declined, and insurance loss ratios have fallen."

The industry expects the improvement in loss ratios to continue in March, leading to better first-quarter results for non-life insurers. COVID-19 cases peaked in March, and oil prices continue to soar.

Researcher Hongjae Lee of Hana Financial Investment said, "In March, automobile usage is understood to have slowed due to the sharp rise in oil prices, and automobile insurance loss ratios are expected to improve more than anticipated. The first-quarter performance of non-life insurers is expected to exceed expectations."

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