The month of November 2024 saw motor insurance loss ratios surge for major motor insurers in South Korea. As the loss ratios breached the 90% mark, it increased the probability of a hike in motor insurance premium.
According to the loss data for the insurance industry for the motor portfolio announced on 23 December 2024 the average loss ratio for automobile insurance at four major property and casualty insurers, including Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance, was 92.4%, up 6.1 percentage points from the same month last year (81.5%).
The cumulative loss ratio from January 2024 to November 2024 was 82.5%, an increase of 3.2% compared to last year (79.3%).
By insurer, the loss ratios were over 90% for Samsung Fire & Marine Insurance (92.8%), Hyundai Marine & Fire Insurance (97.8%), and KB Insurance (91.6%). DB Insurance recorded a loss ratio of 87.5%.
According to industry sources the break-even point for motor insurance is considered to be a loss ratio of 78% to 82%. If it exceeds 82%, it results in a deficit and is considered a factor for premium hikes. With the cumulative loss ratio exceeding 82% this year, a deficit is inevitable if the loss ratio did not decline in December 2024.
A Fitch Ratings report in January 2024 on non-life insurance industry in South Korea had forecast that growth of motor premiums in the country would likely be slow due to the popularity of usage-based insurance products distributed on online channels. Online channels usually offer lower prices.
The sharp increase in the loss ratio, however, is attributed to a rise in traffic accidents due to heavy snowfall and other factors. Each winter, seasonal factors such as heavy snow and icy roads lead to increased road accidents that in turn have led to an increase in the loss ratio.
Source: asiainsurancereview.com
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