'Big 4' Non-Life Insurers Further Lower Auto Insurance Loss Ratio... 80.1% in January

0.4%P Decrease from Last Year's Annual Loss Ratio
May Rise from February This Year... Due to 2% Range Premium Reduction

[Asia Economy Reporter Minwoo Lee] The average loss ratio of the top four non-life insurance companies, which account for about 85% of the automobile insurance market, has decreased compared to the cumulative annual loss ratio last year. The loss ratio, which is the ratio of insurance claims paid to premiums received, is beneficial to insurers when it decreases. However, since automobile insurance premiums are set to be reduced from February this year, there is also a view that the current level is the bottom.

According to the non-life insurance industry on the 20th, the average automobile insurance loss ratio of the four major insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance?was 80.1% last month. Last year's annual average loss ratio was 80.5%, which was considered 'record-breaking,' so this is a 0.4 percentage point decrease. Considering that the industry generally regards an appropriate loss ratio where insurers do not incur losses to be between 78% and 82%, this indicates steady performance.

Compared to the previous month, the decline was even more significant. The average loss ratio of the 'Big 4' insurers was 88.9% last month, a drop of 8.8 percentage points. This is attributed to a surge in emergency dispatch services by non-life insurers due to heavy snowfall at the end of last year. Nevertheless, the loss ratio in December last year was still lower than the same month the previous year.

However, there are forecasts that the loss ratio may rise somewhat from February. Although it has been decided to reduce automobile insurance premiums, rising maintenance costs and other factors remain, inevitably increasing the burden on insurers. Earlier, seven companies, including the four major insurers, announced plans to reduce automobile insurance premiums by 2.0% to 2.9% starting as early as next month.

Still, there is a perspective that insurers can continue to benefit from automobile insurance. This is because the system has changed from this year to prevent 'nai-ron' patients (fraudulent claimants). Going forward, in cases of minor injuries such as simple bruises without accompanying spinal sprains or fractures, if the treatment period exceeds four weeks, proof must be submitted. Additionally, it has become more difficult to inflate insurance claims by intentionally being admitted to higher-grade hospital rooms.