On the night of the 8th, when heavy rain fell mainly in the central region, citizens hurried their steps on the street near Nonhyeon Station in Gangnam-gu, Seoul. Photo by Mun Ho-nam munonam@
[Asia Economy Reporter Changhwan Lee] Record-breaking heavy rain approaching up to 400mm poured across the central region, causing a surge in vehicle flooding damages. In cases of flooded vehicles, if the car owner has purchased the automobile insurance with Own Damage Coverage (self-vehicle coverage), the insurance company provides compensation. Therefore, flooded vehicle owners are advised to carefully check their insurance subscription status.
According to the non-life insurance industry on the 9th, more than 1,000 flooded vehicles occurred due to the heavy rain in the metropolitan area the previous day. Insurance companies are currently assessing the number of flooded vehicles by company, and major non-life insurers such as Samsung Fire & Marine Insurance, DB Insurance, and Hyundai Marine & Fire Insurance reported that as of the morning of that day, at least 200 to over 500 flooded vehicles were reported per company.
As of 8 a.m. that day, Samsung Fire & Marine Insurance received reports of over 500 flooded vehicles related to the previous day's heavy rain, among which more than 200 were foreign cars. The currently reported damage amount is approximately 9 billion KRW.
DB Insurance reported 248 flooded vehicles as of 8 a.m., including 85 foreign cars. The estimated damage amount reached about 2.5 billion KRW. Hyundai Marine & Fire Insurance received 214 flooded vehicle reports as of 7 a.m.
Combining all insurance companies, it is estimated that at least over 1,000 flooded vehicles occurred due to the heavy rain the previous day. Since rain continues mainly in some areas and flooded vehicle damage reports are continuously being received, the final damage is expected to exceed 2,000 vehicles.
A DB Insurance official said, "As of 8 a.m. today, more than 200 flooded vehicles have been reported," adding, "Vehicle owners are still continuously reporting damages to the company, so the number of flooded vehicles will increase."
On the night of the 8th, a driver is evacuating after a vehicle was submerged on a road near Daechi Station in Gangnam-gu, Seoul. [Image source=Yonhap News]
Flood Damage Compensation Possible if Automobile Insurance Own Damage Coverage is Subscribed
Vehicle owners can receive damage compensation depending on the insurance they have subscribed to in case of vehicle flooding. According to the General Insurance Association, if a vehicle is flooded and damaged due to typhoons or floods, and the owner has subscribed to the automobile insurance's 'Own Damage Coverage,' the insurance company will compensate for the vehicle damage.
Victims can confirm the flood damage and claim insurance money from their subscribed non-life insurance company, but compensation is not provided for items left inside the vehicle.
Also, if rainwater enters due to doors or sunroofs being left open, compensation is not provided. If the vehicle is completely damaged by flooding and the owner purchases another vehicle, they can receive a reduction in acquisition tax and registration tax by attaching a total loss certificate issued by the General Insurance Association directly from their insurance company.
As the number of flooded vehicles increases, related damages are expected to surge rapidly. By 8 a.m. that day, Samsung Fire & Marine Insurance and DB Insurance alone had already recorded damages exceeding 10 billion KRW, and combined with other insurers, damages are expected to exceed 20 billion KRW.
With the increase in flooded vehicle damages, automobile insurance loss ratios are also expected to rise. In the first half of this year, the automobile insurance loss ratios of five major non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance?all recorded favorable figures in the 70% range.
Due to high oil prices and COVID-19 impacts reducing vehicle traffic, all five companies improved their loss ratios compared to last year. The insurance industry believes that maintaining automobile insurance loss ratios in the low 80% range can still expect profitability.
However, due to this heavy rain damage, it is anticipated that the automobile insurance loss ratio in the third quarter may rise back to the 80% range. An industry official said, "Since the heavy rain was concentrated in the Gangnam area, many high-priced foreign cars were flooded," adding, "As flood damage increases, it will have a negative impact on automobile insurance loss ratios."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
