11.3% Decrease Compared to Previous Year... Sales Increased by 2.3%
"Last Year Was an Unusual Situation Compared to Average... This Year Also Favorable"
The net profit from automobile insurance in the non-life insurance industry during the first half of this year was estimated to be around 550 billion KRW. Although the net profit decreased by about 11% compared to the same period last year, the industry has steadily maintained profits after escaping from perennial losses following the COVID-19 pandemic.
According to the "2023 First Half Automobile Insurance Business Performance (Preliminary)" report released by the Financial Supervisory Service on the 11th, the net profit from automobile insurance of 12 non-life insurance companies selling automobile insurance was recorded at 555.9 billion KRW. This represents an 11.3% (70.6 billion KRW) decrease compared to the same period last year.
Although the net profit decreased, the streak of profitability continued. Automobile insurance had been a "pain point" for non-life insurers, with net losses reaching 415.2 billion KRW in 2019 and 126.2 billion KRW in 2020. However, after COVID-19, reduced mobility led to the achievement of net profits.
As of the first half of this year, the loss ratio (the ratio of claims paid to premiums received) was recorded at 78.0%. This is 0.9 percentage points higher than the first half of last year but still at a stable level. The industry generally considers a loss ratio range of 78-82% as the break-even point for automobile insurance. A Financial Supervisory Service official explained, "Although the loss ratio increased due to increased mobility after the COVID-19 endemic, it remains lower than the pre-COVID-19 level."
Automobile insurance sales (gross written premiums) also performed well, reaching 10.6385 trillion KRW, a 2.3% (265.4 billion KRW) increase compared to the same period last year. This was influenced by the increase in the number of mandatory automobile insurance subscriptions from 24.51 million vehicles in the first half of last year to 25.10 million vehicles in the first half of this year.
Meanwhile, the oligopoly structure among major companies continued. The market share of the "Big 4" non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and DB Insurance?rose by 0.3 percentage points to 85.2% compared to the same period last year. Among the other eight companies excluding the major ones, only the online specialized insurer Carrol Insurance saw an increase in market share (from 1.3% to 1.6%).
The Financial Supervisory Service evaluated that the automobile insurance profits in the first half of this year slightly decreased compared to the same period last year due to increased claims payments caused by a rise in accident rates and a roughly 2% premium reduction at the beginning of the year. However, considering that the loss ratio was particularly low last year due to the COVID-19 surge, the first half performance this year is regarded as favorable.
A Financial Supervisory Service official stated, "Despite the cumulative effects of premium reductions, if the loss ratio remains stable in the second half as it did in the first half, we will ensure fair and reasonable premium adjustments based on business performance. We also plan to promote institutional improvements such as rationalizing compensation standards."
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