Non-life insurers to hike car premiums by 3%
By Lee Kyung-min
The nation's four major non-life insurers will raise car premiums by an average of 3 percent as early as late December, according to company officials and industry sources, Sunday.
They also expect them to make an additional 3 percent hike in the first half of 2019.
They say the increase is inevitable due to deteriorating bottom lines amid soaring maintenance and repair fees, factors that raise loss rate ― the rate of insurance money paid to subscribers from companies' premium income.
Samsung Fire & Marine, the largest non-life firm by market capitalization, is a seeking premium increase up to around 3 percent to 4 percent over rising loss rate and repair costs.
The firm plans to ask the Korea Insurance Development Institute (KIDI) to review about 2 percent premium increase for loss rate.
The request is in addition to an earlier, separate review for a 1.2 percent premium increase plan over rising repair costs after it renewed contract with 1,500 repair agencies.
Given the 1,500 agencies account for about a third of 5,000 entities it is in business with, pressure for an additional premium hike is expected to further increase in the coming months.
The firm said the increase came amid a loss rate surpassing well over 90 percent over the past few months following a record-breaking heat wave and heavy downpours as well as minimum wage hike.
Firms say about 80 percent of the loss rate is the bottom line for the insurers to help their business stay afloat, with a higher number meaning a decreased profit margin.
Similarly, Hyundai Marine & Fire and DB Insurance each filed for a review of 3 percent increase, while KB plans to increase the rate to 3 percent.
If the so-called “big four,” which account for about 80 percent of the market share, pushes ahead with the premium hike, mid-tier Lotte, Heungkuk Fire & Marine and AXA General are also expected to follow suit.
The collective move was initiated by the nation's sixth-largest Meritz Fire & Marine Insurance in early November after it sought KIDI's review citing losses due to intensified competition-induced lower premiums last year.
According to the Financial Supervisory Service, the country's 11 non-life insurers posted a combined 210.4 billion won ($184.7 million) in operating losses over the first nine months in 2018, compared with 243.7 billion won operating profit recorded a year earlier.
Samsung Fire & Marine Insurance's headquarters in Seoul / Korea Times file