Sung Il-jong, Chairman of the Policy Committee of the Democratic Party, "Non-life insurers make huge profits from the people's suffering"
Fourth quarter KEPCO electricity rate hike also anticipated
Sung Il-jong, Chairman of the Policy Committee of the People Power Party, is delivering opening remarks at the party-government meeting held at the National Assembly on the 28th to discuss measures to resolve the late-night taxi shortage. Photo by Yoon Dong-joo doso7@
[Asia Economy reporters Lee Ji-eun and Kwon Hyun-ji] Even the ruling party has demanded a reduction in car insurance premiums. The intention is to ease the burden on ordinary citizens amid high inflation and an economic downturn, but it is being evaluated as increasing pressure on the market.
On the morning of the 30th, Sung Il-jong, chairman of the Policy Committee of the People Power Party, said at the National Assembly's audit countermeasure meeting, "The net profit of the five major non-life insurance companies in the first half of the year exceeded 2.5 trillion won, marking an all-time high," adding, "Non-life insurers also need to join in sharing the pain of the people by significantly lowering car insurance premiums."
Since non-life insurers made huge profits due to reduced vehicle movement caused by COVID-19 and high oil prices, they are being urged to share the public's pain. Chairman Sung pointed out, "The loss ratio of car insurance in the non-life insurance industry in the first half of this year was 77%, sharply down from 79.4% in the same period last year," adding, "Non-life insurers, who should be a strong support for the people suffering from high exchange rates and inflation, are making huge profits, benefiting from the people's pain." He continued, "The country is currently in an emergency situation due to internal and external factors," and urged, "I ask the non-life insurance industry to join in sharing the people's pain even a little."
The financial authorities had previously ordered a reduction in car insurance premiums. Accordingly, insurance companies are reportedly preparing for additional premium cuts. In particular, there is a prospect that a second reduction may be possible in the second half of this year following the first half. The non-life insurance industry had lowered premiums by about 1.2 to 1.4% last April.
A representative of a non-life insurance company said, "There are many demands for car insurance premium reductions, so we are internally considering additional cuts," but added, "However, the timing is still undecided."
Chairman Sung also said that at least an increase in electricity rates in the fourth quarter is inevitable. He said, "An increase in Korea Electric Power Corporation's (KEPCO) electricity rates seems unavoidable," adding, "KEPCO, which is recording an annual deficit of about 30 trillion won, had cumulative corporate bond issuance of 38.1 trillion won until last year, and it is expected to reach about 70 trillion won this year and about 110 trillion won next year, which could lead to a default situation."
He said, "The obstinacy of former President Moon Jae-in and former Minister of Industry Baek Woon-gyu, who declared 'no electricity rate increase' while pursuing the nuclear phase-out policy, is the cause," and added, "I requested a minimum increase with the people's burden as the top priority."
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