[Asia Economy Reporter Oh Hyung-gil] Insurance companies have differing stances regarding auto insurance. While small and medium-sized companies are consecutively raising premiums, large companies are finding it difficult to increase premiums as their loss ratios have improved.
According to the insurance industry on the 10th, Lotte Insurance will raise personal auto insurance premiums by an average of 2.1% starting today. Commercial use premiums will increase by 2.1%, and business use premiums by 5% respectively.
The reason for the premium increase is interpreted as the auto insurance loss ratio rising, leading to accumulating losses. Lotte Insurance's auto insurance loss ratio last year was 90.9%. The appropriate loss ratio is said to be around 80%.
Last month, MG Insurance raised auto insurance premiums. MG Insurance's auto insurance loss ratio last year was a staggering 107.7%.
Among other small and medium-sized insurers, AXA Insurance (Aksa Insurance) and Carrot Insurance are reported to have requested rate verification from the Korea Insurance Development Institute to decide on whether to raise auto insurance premiums.
Large companies have seen improvements in auto insurance loss ratios this year as well as last year.
According to data from the first quarter, the auto insurance loss ratios of the four major insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance?were between 80.1% and 81.1%. Compared to the same period last year, which ranged from 84.4% to 85.6%, this is a decrease of about 4 percentage points.
Due to the impact of COVID-19 and strengthened social distancing, overall vehicle movement decreased, and the effect of last year's approximately 3% increase in auto insurance premiums was reflected.
Attention is focused on whether large companies with improved loss ratios will also join in raising auto insurance premiums, as despite the improvement, they are still operating at a deficit.
An industry insider said, "The loss ratio came out favorably due to the effect of reduced traffic volume caused by COVID-19," adding, "If the quarantine situation improves with COVID-19 vaccinations, vehicle traffic will increase again, and loss ratios may worsen due to increased repair costs and more summer vacations."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
