By Nam Hyun-woo
Major non-life insurance companies are under government pressure to cut premiums, as they post first half earnings hovering well over analysts' expectations.
According to four major non-life insurers' regulatory filings Tuesday, the combined net profits of Samsung Fire, Hyundai Marine, Dongbu Fire and KB Insurance in the first half of the year stood at 1.64 trillion won ($1.47 billion), up 45.86 percent from a year earlier.
During the period, Samsung Fire's net profit increased to 779.8 billion won from 515.6 billion won, followed by Dongbu with 369.8 billion won, up from 237.6 billion won, Hyundai with 282.2 billion won, up from 198.9 billion won, and KB with 212.6 billion won, up from 175.3 billion won.
The insurers attributed their improved net profits to "stabilized loss ratios" in auto and long-term insurance, as well as profits coming from investments that also increased.
The high profits, however, are expected to bring an adverse effect, as it may give solid ground for the government to pressure them to cut premiums, especially those for medical reimbursement policies.
President Moon Jae-in has been urging domestic insurers to cut premiums for medical reimbursement policies as part of his pledge to ease economic burdens for the public.
The government believes non-life insurers have enjoyed additional profits worth 1.52 trillion won from 2013 to 2015 due to expanded protection of national health insurance.
Thus, the government plans to seek "fairness" by lowering reimbursement policies' premiums, because the insurers basked in the profits in the expanded national health insurance.
Non-life insurers, however, claim that there were "no additional profits," citing the average loss ratio of medical reimbursement policies surpasses 130 percent, resulting in an aggregated 1.6 trillion won deficit last year. A loss ratio higher than 100 percent means that an insurer paid more than it received from policyholders.
According to the General Insurance Association of Korea, Hyundai Marine's loss ratio in medical reimbursement policies stood at 147.7 percent last year, followed by KB with 134.2, Dongbu with 129.7 percent and Samsung Fire with 109.9 percent.
"It is not the sole problem of insurers," an insurance company official said, asking not to be named. "Hospitals also have responsibilities for the high premiums of those policies, because they instigate patients into getting unnecessary treatments."
The premiums for medical reimbursement policies soared during the previous administration, in part because of efforts to encourage liberalized market competition between companies.
Hospitals are also blaming insurance companies. The Korean Medical Association said in a statement that the 1.6 trillion won deficit in medical reimbursement policies stems from insurers' excessive competition and their poorly designed policies.
With the issue becoming a three-way conflict, industry insiders say insurers may end up facing a premium cut, given that the Moon administration considers financial firms as a target of regulations.
Major non-life insurance companies are under government pressure to cut premiums, as they post first half earnings hovering well over analysts' expectations.
According to four major non-life insurers' regulatory filings Tuesday, the combined net profits of Samsung Fire, Hyundai Marine, Dongbu Fire and KB Insurance in the first half of the year stood at 1.64 trillion won ($1.47 billion), up 45.86 percent from a year earlier.
During the period, Samsung Fire's net profit increased to 779.8 billion won from 515.6 billion won, followed by Dongbu with 369.8 billion won, up from 237.6 billion won, Hyundai with 282.2 billion won, up from 198.9 billion won, and KB with 212.6 billion won, up from 175.3 billion won.
The insurers attributed their improved net profits to "stabilized loss ratios" in auto and long-term insurance, as well as profits coming from investments that also increased.
The high profits, however, are expected to bring an adverse effect, as it may give solid ground for the government to pressure them to cut premiums, especially those for medical reimbursement policies.
President Moon Jae-in has been urging domestic insurers to cut premiums for medical reimbursement policies as part of his pledge to ease economic burdens for the public.
The government believes non-life insurers have enjoyed additional profits worth 1.52 trillion won from 2013 to 2015 due to expanded protection of national health insurance.
Thus, the government plans to seek "fairness" by lowering reimbursement policies' premiums, because the insurers basked in the profits in the expanded national health insurance.
Non-life insurers, however, claim that there were "no additional profits," citing the average loss ratio of medical reimbursement policies surpasses 130 percent, resulting in an aggregated 1.6 trillion won deficit last year. A loss ratio higher than 100 percent means that an insurer paid more than it received from policyholders.
According to the General Insurance Association of Korea, Hyundai Marine's loss ratio in medical reimbursement policies stood at 147.7 percent last year, followed by KB with 134.2, Dongbu with 129.7 percent and Samsung Fire with 109.9 percent.
"It is not the sole problem of insurers," an insurance company official said, asking not to be named. "Hospitals also have responsibilities for the high premiums of those policies, because they instigate patients into getting unnecessary treatments."
The premiums for medical reimbursement policies soared during the previous administration, in part because of efforts to encourage liberalized market competition between companies.
Hospitals are also blaming insurance companies. The Korean Medical Association said in a statement that the 1.6 trillion won deficit in medical reimbursement policies stems from insurers' excessive competition and their poorly designed policies.
With the issue becoming a three-way conflict, industry insiders say insurers may end up facing a premium cut, given that the Moon administration considers financial firms as a target of regulations.
