Financial Supervisory Service releases first-half 2026 auto insurance earnings data
Loss ratio rises to 84.9%, expense ratio to 17.0%
Accident count falls 4.5% but treatment and repair costs climb
All four major insurers post underwriting losses
South Korea's auto insurance sector swung to an underwriting loss of 184.8 billion won ($137 million) in the first half of this year, its first half-year deficit in six years, as rising medical and repair costs outpaced a premium increase introduced at the start of the year.
According to the Financial Supervisory Service's preliminary first-half 2026 auto insurance earnings report released Tuesday, total auto insurance sales — measured by gross written premiums — reached 10.64 trillion won, up 426.9 billion won, or 4.2 percent, from 10.21 trillion won in the same period last year. The increase reflected a 0.8 percent rise in the number of insured vehicles to about 25.96 million, as well as a 1.3 percent premium hike that non-life insurers implemented earlier this year.
Despite the revenue growth, profitability deteriorated sharply. Total auto insurance profit — combining underwriting and investment results — fell 144 billion won, or 37.7 percent, to 238 billion won from 382 billion won a year earlier. Investment income rose 71 billion won, or 20.2 percent, to 422.8 billion won, but the core underwriting business posted a loss of 184.8 billion won. That marked a swing of 215 billion won from a 30.2 billion won underwriting profit in the first half of last year, and the first half-year underwriting loss since 2020.
The swing to a loss was driven by simultaneous deterioration in both the loss ratio and the expense ratio. The loss ratio rose 1.6 percentage points year-on-year to 84.9 percent, while the expense ratio climbed 0.6 percentage points to 17.0 percent. Their combined ratio jumped 2.2 percentage points to 101.9 percent, breaching the breakeven threshold of 100 percent. The loss ratio has climbed steadily in recent years — from 77.1 percent in 2022 to 78.0 percent in 2023, 80.2 percent in 2024 and 83.3 percent in 2025.
Notably, the number of accidents fell while total claims costs rose. Auto accident claims in the first half came to about 1.745 million cases, down about 82,000, or 4.5 percent, from about 1.827 million a year earlier. Even so, incurred losses grew by 218.2 billion won, or 2.8 percent — far outpacing the 72.3 billion won, or 0.8 percent, increase in earned premiums. Both personal injury compensation, including hospital treatment costs, and property damage compensation, including repair labor charges, increased, pushing up the average payout per accident.
Earnings deteriorated across all company sizes. The four major insurers — Samsung Fire, DB Insurance, KB Insurance and Hyundai Marine & Fire Insurance — collectively posted an underwriting loss of 51.7 billion won in the first half, reversing a 129.2 billion won profit in the same period last year. All four were in the red: Samsung Fire lost 200 million won, Hyundai Marine & Fire Insurance lost 16.4 billion won, KB Insurance lost 26.2 billion won and DB Insurance lost 8.9 billion won. Mid-sized insurers recorded a combined loss of 76.1 billion won, while online-only specialists — AXA and Hana — posted a combined loss of 57 billion won. Loss ratios were 84.5 percent for large insurers, 86.3 percent for mid-sized firms and 90.8 percent for online-only players, rising as company size decreased.
The four major insurers held a combined market share of 84.8 percent, down 0.2 percentage points, preserving the sector's oligopolistic structure. After Hanwha General Insurance absorbed Carrot General Insurance last October, mid-sized insurers' share rose 1.6 percentage points to 11.0 percent, while online-only specialists' share fell 1.4 percentage points to 4.2 percent. Hanwha General Insurance's gross written premiums surged 289.2 billion won year-on-year to 635.8 billion won. By sales channel, face-to-face sales accounted for 45.1 percent, online (CM) for 38.3 percent, telephone (TM) for 15.6 percent and platform (PM) for 1.0 percent; the share of face-to-face sales slipped 1.3 percentage points while online and platform channels continued to expand.
The Financial Supervisory Service said it would monitor whether new measures for minor-injury claimants — which took effect Thursday — translate into an improvement in the loss ratio. "We plan to work jointly with relevant agencies to ensure that well-intentioned consumers do not face inconvenience as the minor-injury measures take effect, and to supervise the process so that any improvement in the loss ratio achieved through system reform can ultimately lead to lower auto insurance premiums for all citizens," the FSS said.
won@heraldcorp.com
