Auto insurance loss ratio hits 84.7% through May, deficits persist despite premium hikes

The auto insurance loss ratio at South Korea's major non-life insurers averaged 84.7 percent for the first five months of this year, extending a streak of elevated losses.

The cumulative auto insurance loss ratio for the January–May period at the four largest non-life insurers — Samsung Fire, Hyundai Marine & Fire Insurance, DB Insurance and KB Insurance — averaged 84.7 percent, up 1.9 percentage points from 82.8 percent in the same period last year, according to industry data released Tuesday.

The four companies together hold more than 85 percent of the auto insurance market. For May alone, the loss ratio stood at 80.8 percent, down 0.3 percentage points from 81.1 percent in the same month last year.

The industry generally regards 80 percent as the break-even loss ratio for auto insurance, meaning any reading above that level is considered in effect loss-making.

Insurers raised personal auto insurance premiums by 1.3 to 1.4 percent starting in February — the first increase in five years since 2021, reversing four consecutive years of cuts and freezes. Despite the hike, the limited size of the increase and the lingering effect of four straight years of premium reductions have kept the loss ratio on a deteriorating trend.

The non-life insurance industry expects earnings to worsen further as growth in the number of registered vehicles slows.

"From June onward, heavy rains and the monsoon season are expected to drive more flooding, falling-object incidents and wet-road accidents, so the loss ratio outlook is negative," an industry official said.