By Kang Seung-woo
A large number of local non-life insurance companies were hit hard in the auto segment by their escalating loss ratio last month.
According to company data, the average loss ratio for eight non-life insurers selling auto policies to local customers surpassed 80 percent in August, up from 73 percent a year ago.
The ratio, which is the portion of insurance money to their insurance premium income, is seen as the barometer for companies’ profitability and if a loss ratio stays above 80 percent, auto insurance firms are not able to make their ends meet.
ERGO Daum Direct suffered the highest loss ratio of 96 percent, followed by Green Non-Life Insurance, Hyundai Hicar Direct and The-K Non-Life Insurance which saw their ratio in shortfall remain well-above 80 percent, from 85.9 percent to 88.4 percent.
The four insurers which stayed below the 80 percent mark were Hyundai Marine and Fire Insurance, Samsung Fire and Marine Insurance, Dongbu Insurance and Meritz Fire and Marine Insurance, but they neared the level.
“Since it hit its lowest point in the spring time, the loss ratio has been on the rise,” an official of a non-life insurance company said.
According to him, the April reading was 72.7 percent, but since then, it has been soaring from 76.6 percent in May to an August estimation of 81 to 82.
“The industry has failed to find out the exact reason of it. We are just guessing that it may have been affected by the summer break season,” said the official.
Analysts think the seasonal factor had an influence on the growth.
“August is an accident-prone month because of the rainy season,” Jeong Gil-won, an analyst at Daewoo Securities, said.
“In addition, they failed to raise the premiums last year.”
The upward trend is expected to continue in the latter part of the year.
“The industry expects the ratio to continue climbing for the time being because it tends to do so, when it nears the end of the year,” said the official, who predicted it will go up in September due to the Chuseok Holiday.
Jeong said, “It is likely to maintain this pace within this year.”