Tension Rising Between Insurers, Repair Shops

By Yoon Ja-young
Staff Reporter

Tension is escalating between non-life insurance companies and auto repair shops regarding auto repair fees.

The automobile maintenance associations in Seoul, Gyeonggi Province and Incheon made a joint statement, requesting that the Ministry of Land, Transport and Maritime Affairs should announce new auto repair fees guidelines as soon as possible.

The ministry ordered the Korea Institute for Industrial Research to provide a report on appropriate auto maintenance fees as the guideline fees haven't been changed for years.

The institute came up with rules that established the amount of fees one could charge to between 19,029 and 30,894 won per hour, which are 5 to 50 percent higher than the current fees set at between 18,228 and 20,511 won.

The new maintenance fee guideline was scheduled to come into effect last summer, but it was delayed.

Maintenance shops are demanding that the new guideline should be applied right away, as they have been paid lower fees for their services for years.

However, it is meeting fierce opposition from non-life insurance companies, which are hampered by the soaring loss ratio in auto insurance.

They demand that auto insurance premiums should be raised first if the auto maintenance fees are to be raised. The loss ratio of auto insurance, or the ratio of insurance money paid to subscribers compared with their insurance premium income, marked 82.8 percent last December, the highest ever since November 2006. Non-life insurance firms claim that around a 70 percent loss ratio is the break-even point.

They say there is little need for a raise as 92.2 percent of auto repair shops are recording a surplus, according to the report by the institute.

They are also considering setting up auto maintenance shops of their own, so that they can find out how much it actually takes to repair a car. Introducing the insurance customers to maintenance shops affiliated with insurers is another option for the insurers.

The government is also hesitant on announcing the new maintenance fees guideline as the government is focusing on controlling inflation. "Auto insurance premiums came to be on the price monitoring list of the government, as virtually everybody is affected by auto insurance premiums," said a representative at a non-life insurance company, who added that it wasn't good news for these businesses. Despite increased demand from auto insurance companies that they can't survive amid the soaring loss ratio, the financial regulator has been opposing the premium hike.

chizpizza@koreatimes.co.kr

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