October Loss Ratio Hits 87.4%, Up 2.2 Percentage Points Year-on-Year
Rise in Auto Insurance Fraud and Overtreatment of Minor Injury Patients
The cumulative auto insurance loss ratio for October has exceeded 85%. It is expected that the four-year trend of lowering auto insurance premiums will be difficult to maintain through next year.
According to the non-life insurance industry on November 24, the cumulative auto insurance loss ratio for the four major non-life insurers (Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance) from January to October this year was 85.7%, up 4.2 percentage points from the same period last year. For October alone, the loss ratio was 87.4%, a 2.2 percentage point increase compared to the same month last year.
Looking at the cumulative loss ratios for October by insurer: Samsung Fire & Marine Insurance recorded 86%, DB Insurance 84.8%, Hyundai Marine & Fire Insurance 86%, and KB Insurance 85.8%. In the industry, a loss ratio of 82% for major insurers is considered the break-even point. These four major non-life insurers each posted a loss of between 50 billion and 60 billion won in auto insurance in the third quarter of this year.
The rise in loss ratios for non-life insurers selling auto insurance is due to several factors: four consecutive years of auto insurance premium reductions through this year, increased repair costs, a rise in auto insurance fraud, overtreatment of minor injury patients, and abnormal weather conditions. An insurance industry official stated, "This year, auto insurance is expected to post losses in the hundreds of billions of won," adding, "It will be realistically difficult to lower auto insurance premiums again next year."
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