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 Jang Jin-hyung aymsdream@
[Asia Economy Reporter Changhwan Lee] Due to the heavy rain that has continued since the 8th, more than 7,000 vehicles were reported flooded as of the morning of the 10th. The estimated damage is expected to exceed 100 billion KRW. The damage amount increased as the heavy rain concentrated in Gangnam, Seoul, causing many high-end foreign cars to be flooded.
According to the property and casualty insurance industry on the 10th, 7,678 flooded vehicles were reported to 12 domestic property and casualty insurance companies from the 8th until 1 p.m. on the same day.
The damage amount is also snowballing. The estimated loss, which was 65.8 billion KRW as of 2 p.m. the previous day, increased to 97.8 billion KRW as of 1 p.m. on the 10th. Since damage reports continue to come in, the loss amount is expected to rise to the 100 billion KRW range.
The insurance industry evaluates that vehicle damage caused by this summer's 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 about 2,000 foreign cars were reported to major property and casualty insurers 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.
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@
The 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 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 and casualty 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.
As of June, Samsung Fire & Marine Insurance's automobile insurance loss ratio was 77.0%, DB Insurance 75.0%, Hyundai Marine & Fire Insurance 75.7%, Meritz Fire & Marine Insurance 73.2%, and KB Insurance 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 in the low 80% range, the breakeven point can be surpassed. With the loss ratio in the 70% range in the first half, some voices emerged calling for additional reductions in automobile insurance premiums by property and casualty insurers this year.
However, due to the damage caused by this heavy rain, there is a possibility that the automobile insurance loss ratio in the third quarter will 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."
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