January Auto Insurance Loss Ratio at 82%... "This Year Will Be Tougher"

"Longer Lunar New Year Holiday Led to Decreased Traffic Volume"

Last month, the loss ratio of automobile insurance for major non-life insurance companies barely stayed at the break-even point.

According to the non-life insurance industry on the 24th, the automobile insurance loss ratio of the four major non-life insurers?Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance?last month averaged 82% (simple average of the four companies), maintaining a similar level to the same period last year (82.1%). Compared to the previous month (92.8%), it dropped by 10.8 percentage points. These insurers hold about 85% of the automobile insurance market share.

Generally, an automobile insurance loss ratio of 80% is considered the break-even point. For major companies, it is regarded as 82%.

Last year, the annual cumulative average loss ratio of the four major non-life insurers was 83.3%, up 3.5 percentage points from the previous year (79.8%). The industry expects the automobile insurance loss ratio to rise further this year. Profitability has deteriorated due to four consecutive years of automobile insurance premium reductions from 2022 to this year, and costs have increased due to higher maintenance fees. Recently, major non-life insurers announced automobile insurance premium reduction rates of up to 1%. From April, Samsung Fire & Marine Insurance and Meritz Fire & Marine Insurance will reduce premiums by 1%, KB Insurance by 0.9%, DB Insurance by 0.8%, and Hyundai Marine & Fire Insurance by 0.6%.

As the automobile insurance loss ratio rises, profit margins are also sharply declining. Last year, Hyundai Marine & Fire Insurance's automobile insurance profit was 19 billion KRW, down 91% from the previous year. During the same period, KB Insurance's profit was 8.7 billion KRW, down 82%. Last year, DB Insurance posted 171 billion KRW and Samsung Fire & Marine Insurance 96 billion KRW in automobile insurance profits, but both companies saw their results halved compared to the previous year.

An industry official said, "Last month, due to the unusually long Lunar New Year holiday, traffic volume decreased, keeping the number of accidents and loss ratio at levels similar to January last year," adding, "This year, the loss ratio is expected to worsen further due to automobile insurance premium reductions and increases in hourly maintenance labor costs."

This content was produced with the assistance of AI translation services.