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| Insurers decided to raise car insurance premiums due to their worsening loss ratios. Getty Images bank |
By Jhoo Dong-chan
Insurance firms will raise their car insurance premiums this month, according to industry sources.
This is expected to further burden the middle and lower classes, already beset by rising consumer prices and bank interest rates following a hike in the central bank's key base rate.
Seven insurers will raise car insurance premiums starting Jan. 16.
It has been three years since they raised the premiums in January 2016.
Hyundai Marine & Fire and DB Insurance will raise their premiums by an average 3.4 percent on Jan. 16. The hike includes all their insurance products for private and company cars. Commercial cars, such as taxis, are also included in the hike.
Meritz is also raising its car insurance premiums by an average 3.2 percent. The plan includes the premium hike for private cars by over 4 percent on the day.
The nation's fourth-largest, KB Insurance will raise its premiums by an average 3.4 percent, and then Hanwha General Insurance raises its own by 3.2 percent on Jan. 21. Hanwha General is the nation's fifth-largest non-life insurer.
On Jan. 24, the nation's only car-only insurer AXA will also raise its car insurance premiums by an average 3 percent.
Korea's largest non-life insurer Samsung Fire & Marine Insurance will follow suit with a 2.7 percent increase on Jan. 31.
"The hike is inevitable," said an industry insider who asked not to be named.
"Insurers' loss ratios are continuing worsening in recent years due to soaring maintenance and repair fees. Now, the loss ratio has surpassed 90 percent. Under the current conditions, it's impossible for us to stay in the car insurance business."
The loss ratio refers to the ratio of losses to gains. It is calculated based on the ratio of paid insurance claims, including adjustment expenses, to premiums earned.
If a firm pays 80,000 won ($71.91) in claims for every 160,000 won in collected premiums, the loss ratio is 50 percent.
According to the Financial Supervisory Service, the country's 11 non-life insurers posted a combined 210.4 billion won in operating losses over the first nine months of 2018, compared with an operating profit of 243.7 billion won recorded a year earlier.
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