'Big 4' Non-Life Insurers Sequentially Cut Car Insurance Premiums by 2.5% Range (Comprehensive)

Samsung·KB down 2.6%, Hyundai·DB down 2.5%
Applied from February next year... Authorities' Win-Win Finance Cooperation

Major large non-life insurance companies have decided to reduce car insurance premiums by about 2.5% next year. This is interpreted as a response to the financial authorities' win-win finance policy.

According to the insurance industry on the 20th, starting with DB Insurance yesterday, the 'Big 4' non-life insurers with a market share exceeding 80%, including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and KB Insurance, announced consecutive reductions in car insurance premiums. Samsung Fire & Marine Insurance and KB Insurance decided to lower premiums by 2.6% each, while Hyundai Marine & Fire Insurance and DB Insurance will reduce them by 2.5%. Considering that car insurance premiums are usually around 700,000 KRW, it is expected that there will be a discount effect of about 17,500 KRW per person. Samsung Fire & Marine Insurance and KB Insurance also plan to reduce motorcycle insurance premiums by about 8-10%. The reduced premiums will be applied from contracts with liability starting in February next year.

This reduction in car insurance premiums is seen as a result of the financial authorities' win-win finance policy. Earlier this year, car insurance premiums were already lowered by about 1-2% under the same name. Car insurance, which has about 24 million subscribers, is mandatory for car owners. From the insurers' perspective, it has been a product that recorded losses for years. The net loss amounted to 415.2 billion KRW in 2019 and 126.2 billion KRW in 2020.

However, after COVID-19, as mobility decreased, the loss ratio (the ratio of paid insurance claims to received premiums) improved, and insurers began to achieve net profits in earnest. This created room to lower premiums. According to the Financial Supervisory Service, as of the first half of this year, the net profit of 12 non-life insurers selling car insurance was 555.9 billion KRW. According to the industry, the average cumulative loss ratio of the Big 4 insurers from January to October this year was 78.6%. The industry generally considers a loss ratio of about 78-82% as the break-even point.

The financial authorities' consistent demand for win-win measures from the insurance industry is also in this context. Earlier this month, Financial Services Commission Chairman Kim Joo-hyun and Financial Supervisory Service Governor Lee Bok-hyun emphasized win-win finance with insurance company CEOs at a meeting. Chairman Kim said, "The foundation of insurance lies in the spirit of mutual aid among policyholders and long-term trust between policyholders and insurance companies," adding, "Given that policyholders are also facing difficulties due to recent high interest rates and high inflation, I hope insurance companies will pay attention and show consideration to alleviate the difficulties of policyholders as trusted partners."