By Kim Tae-jong

Non-life insurance companies will again lower car insurance premiums by around 2 percent amid growing calls for the reduction due to a drop in their loss ratios.

It will be the first time for local auto insurers to cut prices twice in a year, following a 2.5 percent drop on average earlier this year.

According to non-life insurance firms, major players such as Samsung, Hyundai, Dongbu and LIG all plan to lower premiums.

The move came as Financial Supervisory Service Governor Kwon Hyouk-se last month suggested auto insurers further cut premiums, as their loss ratios had fallen to under 70 percent.

The loss ratio for car insurance refers to the proportion of coverage an insurer pays to its policyholders from the premiums. The higher the loss rate, the more likely the insurer will be in the red.

Rates between 70 and 72 percent are considered as break-even for large insurers and 76 percent for smaller firms that operate online.

Last month, the ratio stood at 68.4 percent for Samsung, 69.5 percent for Dongbu, 66 percent for Hyundai and 69 percent for LIG.

Firms will soon decide the level of reductions and request the Korea Insurance Development Institute verify them before they are announced next month.

But the cuts will mainly benefit mainly those who own cars with an engine capacity of 1,600cc or less and those who drive vans with 7 to 12 seats. Drivers of cars with 2,000cc engines or more and imported cars will be excluded from the lower prices.

But some minor market players have criticized the government, saying it is trying to use the premium cuts as an easy way to win the hearts of voters ahead of December’s presidential election.

“The government previously forced us to lower car insurance premiums early this year ahead of the parliamentary elections and now they want us to further lower premiums again ahead of the presidential election,” an official from a small auto insurance firm said. “It’s too much for them to force us to lower the premiums twice in a year.”