Improvement in January Loss Ratio Due to COVID-19 Social Distancing Impact
[Asia Economy Reporter Oh Hyung-gil] Non-life insurance companies are relieved by the forecast that traffic volume during the Lunar New Year holiday period will decrease compared to previous years due to the COVID-19 pandemic. They expect this to have a positive impact on the recently stabilizing automobile insurance loss ratio.
According to the insurance industry on the 11th, automobile insurance showed improvement compared to the previous year last month. Based on the preliminary closing for January, the automobile insurance loss ratio of nine companies including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, Meritz Fire & Marine Insurance, Hanwha General Insurance, Lotte Insurance, MG Insurance, and Hana Insurance was recorded at an average of 86.8%.
This is an improvement of more than 6 percentage points compared to the average loss ratio of 92.9% in December, and a decrease of 5.9 percentage points compared to the previous year's January average of 92.7%.
This is attributed to the significant reduction in vehicle movement compared to the previous year due to the social distancing level being raised to 2.5. As the loss ratio improved, non-life insurers were able to breathe a sigh of relief. It is reported that a 1 percentage point improvement in the automobile insurance loss ratio results in an overall profit and loss improvement effect of around 150 billion KRW for the entire industry.
With traffic volume expected to decrease significantly during this Lunar New Year holiday, further improvement in the loss ratio is anticipated this month as well.
The Ministry of Land, Infrastructure and Transport conducted a survey from January 7 to 26 targeting 9,398 households to forecast traffic demand during the special traffic measures period for the Lunar New Year holiday (February 10?14). The survey estimated a total of 21.92 million people, averaging 4.38 million people per day, will travel. This is a 32.6% decrease compared to the Lunar New Year holiday period last year.
Additionally, the number of vehicles using highways is expected to average 4.01 million per day, a 14.9% decrease compared to the previous year.
Looking at the daily travel demand out of the total 21.92 million travelers, the numbers were surveyed as 4.13 million on the 10th, 4.28 million on the 11th, 5.45 million on the 12th, 4.49 million on the 13th, and 3.57 million on the 14th.
An official from the non-life insurance industry said, "Measures such as the ban on gatherings of five or more people and the prohibition of in-store dining after 9 p.m. at restaurants have significantly reduced vehicle traffic," adding, "We expect this trend to continue for the time being."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
