South Korea's auto insurance loss ratio rose in the first five months of this year compared with a year earlier. Concerns are mounting over a further increase ahead of the monsoon season, when accidents tend to rise.
The four major insurers—Samsung Fire & Marine Insurance (000810.KS), Hyundai Marine & Fire Insurance (001450.KS), KB Insurance, and DB Insurance (005830.KS)—posted a cumulative auto insurance loss ratio of 84.7% for the January-to-May period, up 1.9 percentage points from the same period last year, according to financial industry sources Monday.
The auto insurance loss ratio is the ratio of claims paid out to premiums collected by insurers, with around 80% generally considered the break-even point.
The industry cites the limited effect of premium increases and the cumulative impact of past premium cuts as the reasons behind the recent rise in the loss ratio. "Premiums rose this year, but the increase was not large, and the loss ratio climbed as the impact of premium cuts over the past four years accumulated," an insurance industry official said.
The loss ratio is expected to climb further with the onset of the full monsoon season. "If road accidents on wet surfaces and vehicle flooding caused by heavy rain increase, upward pressure on the loss ratio could grow," an industry official said.
