Under Political Pressure... Considering Car Insurance Premium Reduction Up to the 2% Range

[Asia Economy Reporter Bu Aeri] As the political sphere pressures for premium adjustments, non-life insurance companies and financial authorities are considering measures to reduce automobile insurance premiums by up to the 2% range.

According to the insurance industry on the 8th, political parties including the People Power Party have expressed dissatisfaction with the 1% range reduction in automobile insurance premiums, prompting non-life insurers and financial authorities to deliberate on expanding the reduction scope.

Automobile insurance premiums are autonomously determined by non-life insurers, but they are closely related to the public's daily life and also affect inflation. The political sphere is pressuring the insurance industry to lower premiums, citing a favorable automobile loss ratio of 80%.

The four major companies?Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance?are pushing for a reduction in automobile insurance premiums in the 1% range, but Lotte Insurance is reportedly considering a reduction of up to 2.9%, and Meritz Fire & Marine Insurance up to 2.5%.

If Lotte Insurance and Meritz Fire & Marine Insurance proceed with a 2% range reduction in automobile insurance premiums, the four major companies are also expected to face pressure to expand their reduction scope.

An insurance industry official said, "Since this is a sensitive issue for the public, there seems to be a demand to show a more visible reduction than the 1% range."

Meanwhile, indemnity insurance, which had been pushing for a double-digit premium increase, is facing difficulties in implementing such increases due to household burden and inflation concerns. The deficit of indemnity insurance companies was 2.5 trillion won in 2020, 2.8 trillion won last year, and a deficit in the 2 trillion won range is expected this year as well. Indemnity insurance premiums were increased by 20.9% in 2017, frozen in 2018 and 2019, increased by 6-7% in 2019 and 2020, and by 10-12% last year.

[Image source=Yonhap News]