Over 5 Billion Won Ferrari Also Locked... More Than 5,000 Vehicles Flooded by Torrential Rain

On the 9th, vehicles that were submerged due to heavy rain in front of Jinheung Apartment in Seocho-gu, Seoul, are emerging as the water recedes. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Changhwan Lee] It has been revealed that more than 5,000 vehicles were flooded due to heavy rain that began on the 8th. The damage amount exceeded 65 billion KRW. The damage was analyzed to have increased as the heavy rain concentrated in Gangnam, Seoul, flooding many expensive foreign cars.

According to the property insurance industry on the 10th, as of 2 p.m. the previous day, the number of flooded vehicles reported to 12 domestic property insurance companies due to this heavy rain reached 4,791. Since reports of flooded vehicles continued to come in after 2 p.m., the total number of flooded vehicles is expected to exceed 5,000 as of the morning of that day.

The damage amount is also snowballing. As of 2 p.m. the previous day, the estimated damage amount reached 65.8 billion KRW. Since damage reports continue to come in, the loss amount is expected to increase further.

The insurance industry evaluates that vehicle damage caused by this summer’s concentrated heavy rain will be greater than in previous years. This is because the heavy rain poured mainly in Gangnam, a wealthy area, flooding many luxury foreign cars.

It is understood that more than 1,000 foreign cars were reported to major property insurance companies due to this heavy rain. Among them, a Ferrari worth well over 500 million KRW was reported as a flooded vehicle. Ultra-luxury vehicles such as a Mercedes-Benz S-Class worth about 230 million KRW, a Porsche Panamera worth about 180 million KRW, and a Bentley worth about 170 million KRW were consecutively reported. In addition, damage reports for luxury foreign cars such as BMW, Audi, and Volvo continued.

The property insurance industry estimates the damage amount at about 10 million KRW per vehicle when considering total loss processing for vehicle flooding caused by typhoons or heavy rain, but this time the damage amount increased more than usual because the heavy rain hit Gangnam, where foreign cars are densely concentrated.

As flood damage to vehicles increases, the loss ratio of automobile insurance is also expected to rise. In the first half of this year, the automobile insurance loss ratios of five major property insurance companies?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. As of June, Samsung Fire & Marine Insurance’s automobile insurance loss ratio was 77.0%, DB Insurance was 75.0%, Hyundai Marine & Fire Insurance was 75.7%, Meritz Fire & Marine Insurance was 73.2%, and KB Insurance was 75.0%. This was thanks to reduced traffic accidents due to decreased vehicle traffic caused by high oil prices and COVID-19.

The insurance industry believes that if the automobile insurance loss ratio is maintained only in the low 80% range, the breakeven point can be surpassed. With the loss ratio recording the 70% range in the first half, some voices emerged suggesting that property insurance companies should further reduce automobile insurance premiums this year.

However, due to the damage from this heavy rain, there is now speculation that the automobile insurance loss ratio in the third quarter may rise again to the 80% range, making the possibility of additional premium reductions uncertain.

An insurance industry official said, "As flood damage to luxury foreign cars increases, the loss amount is expected to be larger than anticipated," adding, "If flood damage increases, it is inevitable that the automobile insurance loss ratio will also rise."