South Korea's auto insurance loss ratio continued to climb through April despite premium hikes by major non-life insurers earlier this year, with the figure likely to worsen further as traffic volume increases during the May holiday period.
The cumulative auto insurance loss ratio (simple average) for the four major non-life insurers — Samsung Fire & Marine Insurance (000810.KS), Hyundai Marine & Fire Insurance, DB Insurance and KB Insurance — stood at 85.8% from January through April, up 2.5 percentage points from a year earlier, according to the non-life insurance industry on Wednesday. The April loss ratio was 85.4%, down 0.3 percentage point from the same month last year.
KB Insurance posted the highest cumulative loss ratio through April at 86.2%. Samsung Fire & Marine Insurance followed with 85.7%, while Hyundai Marine & Fire Insurance and DB Insurance both recorded 85.6%, and Meritz Fire & Marine Insurance came in at 82.4%.
The auto insurance loss ratio refers to the ratio of insurance payouts to policyholders against premiums collected by insurers. A loss ratio of 80% is generally considered the break-even point, and profitability deteriorates as the figure rises above that level.
Industry observers attribute the trend to the lingering impact of insurers' inability to raise auto insurance premiums over the past four years. "Despite the first premium hike in five years, the result reflects four consecutive years of premium cuts in the past and a limited scope of the recent increase," an insurance industry official said.
The loss ratio is likely to rise further this month, analysts said. Excessive treatment of minor injury patients at oriental medicine hospitals, along with rising losses from physical damage including parts and repair costs, has been pushing the figure higher. An increase in accidents driven by heavier traffic during the May holiday period could also drive up the loss ratio.
