Auto Insurance Profit Plunges 44% in First Half... Barely Above Break-Even Point

Sharp Rise in Loss Ratio Due to Excessive Medical Treatments and Flood Damage
Increase in Treatment Costs Led by Korean Medicine Hospitals
Oligopolistic Structure Maintained as Top Four Insurers Hold 85.3% Market Share

In the first half of this year, the profit and loss from auto insurance dropped by approximately 44% compared to the same period last year. This was due to a sharp increase in the loss ratio, driven by excessive medical treatments and flood damage.

According to the "Provisional Business Performance of Auto Insurance for the First Half of 2025" released by the Financial Supervisory Service on September 7, auto insurance sales (direct premiums written) in the first half of this year totaled 10.2115 trillion won, down 302.6 billion won (2.9%) from the same period last year. The profit and loss from auto insurance amounted to 382 billion won, a steep decline of 299.1 billion won (43.9%) compared to the 681.1 billion won recorded in the same period last year.

Two vehicles have had an accident and are stopped.

The loss ratio for the first half was 83.3%, up 3.1 percentage points from the same period last year. The expense ratio was 16.4%. The combined ratio, which is the sum of the loss ratio and expense ratio, reached 99.7%, approaching the break-even point of 100%. If the combined ratio exceeds 100%, it results in a deficit.

The main reason for the increase in the loss ratio was the rise in hospital treatment costs, especially at Korean medicine hospitals. In the first half of this year, expenses for Korean medicine treatments increased by 6% compared to the same period last year, which is double the 3% increase in Western medicine treatment expenses. Additionally, the loss amount rose by 86.7 billion won year-on-year due to higher parts costs from auto manufacturers, further pushing up the loss ratio.

The market share of major non-life insurers selling auto insurance (Samsung, DB, Hyundai, KB) stood at 85.3%, maintaining an oligopolistic structure. The market share of mid- and small-sized companies (Meritz, Hanwha, Lotte, MG, Heungkuk) was 8.5%, up 0.2 percentage points from the end of last year. During the same period, the market share of online-focused companies (AXA, Hana, Carrot) was 6.4%, down 0.2 percentage points.

By sales channel, face-to-face accounted for 46.4%, cyber marketing (CM) for 37.2%, telemarketing (TM) for 15.7%, and platform marketing (PM) for 0.7%. Overall, face-to-face and TM channels are shrinking, while online channels continue to expand.

An official from the Financial Supervisory Service stated, "In the second half of the year, there are still factors that could worsen the loss ratio, such as large-scale torrential rains in July and increased traffic during the autumn travel season. We will make multifaceted efforts to ensure that the auto insurance loss ratio can be managed stably, including measures to prevent insurance payout leakage."