Auto Insurance Loss Ratio Hits 89.4% in January...Profitability Pressure Persists

Last month, the auto insurance loss ratios of major non-life insurers rose year-on-year, continuing to put pressure on their profitability.

According to the non-life insurance industry on the 24th, the average auto insurance loss ratio (simple average of the four companies) of the four major non-life insurers Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance came to 89.4% last month, up 7.4 percentage points from 82.0% a year earlier. Compared with the previous month (96.0%), it was down 6.6 percentage points. These non-life insurers together account for about 85% of the auto insurance market.

In general, an auto insurance loss ratio of 80% is considered the break-even point. For large insurers, the break-even level is viewed as 82%.

The cumulative annual average loss ratio of the four major non-life insurers last year was 87.0%, up 3.7 percentage points from 83.3% in the previous year. Profitability deteriorated due to accumulated premium cuts and rising cost burdens. In response, insurers have recently been seeking to restore their profit and loss positions by raising premiums.

As auto insurance loss ratios climbed, profit volumes also declined. In the auto insurance segment, Samsung Fire & Marine Insurance posted a loss of 159.0 billion won, KB Insurance 107.7 billion won, Hyundai Marine & Fire Insurance 90.8 billion won, and DB Insurance 54.7 billion won.

An industry official said, "The deterioration in auto loss ratios is affecting insurers' profit and loss," adding, "We may be able to expect the impact of auto insurance rate hikes from the second half of this year onward."