Car Insurance Premiums to Drop Again in 6 Months... Expected to Decrease by Up to Early 1%

Major Non-Life Insurers Discuss Extent and Timing of Premium Reductions
People Power Party: "Auto Insurance Premiums Affect Inflation... Should Be Lowered"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Junran] Auto insurance premiums are expected to be reduced by up to 1.4% in half a year. According to the insurance industry on the 7th, major non-life insurance companies such as Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and DB Insurance recently agreed on the necessity to partially lower auto insurance premiums as a way to share the pain caused by the economic difficulties. Accordingly, they plan to actively discuss the specific reduction rate and timing.

This is interpreted as reflecting the atmosphere that the non-life insurance industry should actively lower auto insurance premiums amid the recent situation where the burden on vulnerable groups is increasing due to high interest rates and high inflation. On the 6th, the People Power Party repeatedly pressured for a reduction in auto insurance premiums during the party-government council meeting. Sung Il-jong, the policy committee chairman of the People Power Party, said, "Auto insurance is mandatory and has a significant impact on people's livelihoods to the extent that it is included in the consumer price index," adding, "We will examine whether market trends and autonomous functions regarding auto insurance are operating so that auto insurance premiums do not become a burden on people's livelihoods."

A representative from a non-life insurance company stated, "We are positively considering the reduction of auto insurance premiums mentioned at the party-government council meeting as a way to share the pain caused by the rapid rise in prices." Another non-life insurance company official said, "Considering the recent atmosphere, we are reviewing the reduction of auto insurance premiums," adding, "The timing and the extent of the reduction are key."

The General Insurance Association also said, "We recognize the seriousness of the current economic situation, including inflation, and will review lowering auto insurance premiums to reduce the economic burden on the public even slightly," adding, "Considering the management situation of individual insurance companies, the details such as whether to reduce premiums, the extent of reduction, and the timing of implementation will be reviewed and decided autonomously by each company."

Accordingly, non-life insurance companies are deliberating on the timing and extent of premium reductions. Considering this year's auto insurance loss ratio, a reduction in the early 1% range is likely.

The loss ratios of five major non-life insurance companies?Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, Meritz Fire & Marine Insurance, and KB Insurance?averaged 77.9% from January to September this year, indicating room for premium reduction. Samsung Fire & Marine Insurance's auto insurance loss ratio from January to September was 78.7%, DB Insurance 77.9%, Hyundai Marine & Fire Insurance 78.8%, Meritz Fire & Marine Insurance 76.1%, and KB Insurance 78.2%.

The auto insurance loss ratio is the ratio of incurred losses to earned premiums. Considering operating expenses, the break-even loss ratio for auto insurance is known to be around 80%. This is interpreted as indicating that there is room for additional premium reductions, especially among major non-life insurance companies.

Previously, the five major companies including Samsung Fire & Marine Insurance lowered personal auto insurance premiums by 1.2 to 1.3% in April and May. This was because the prolonged COVID-19 pandemic led to a decrease in vehicle usage and accident cases, improving the auto insurance loss ratio. At that time, the adjustment of auto insurance premiums was made for the first time in two years since a 3% increase in January 2020.

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