Major non-life insurers posted deficits in auto insurance, dragging down net income. Within the insurance industry, there is a consensus that next year's auto insurance premiums need to rise.
According to the insurance industry on the 16th, third-quarter net income fell at all four major non-life insurers (Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance) this year. Industry leader Samsung Fire & Marine Insurance posted third-quarter net income of 538.5 billion won, down 2.9% from a year earlier. During the same period, DB Insurance fell 35.4%, the steepest decline. Hyundai Marine & Fire Insurance decreased 14.2%, and KB Insurance fell 14.7%.
The deterioration in results stemmed from deficits in auto insurance. Samsung Fire & Marine Insurance posted a deficit of 64.8 billion won in auto insurance profit and loss in the third quarter. Hyundai Marine & Fire Insurance turned to a deficit of -55.3 billion won, the first in five years. DB Insurance recorded a cumulative profit of 21.8 billion won, but that was down 87.9% from last year.
From January to September this year, the average cumulative loss ratio at the four major non-life insurers was 85.4%, up 4.3 percentage points from a year earlier. In auto insurance, when the combined ratio—loss ratio plus expense ratio—exceeds 100%, it turns to a loss. Considering that the average expense ratio is around 16%, the combined ratio has already topped 100%. With more car accidents occurring in winter, losses are seen as unavoidable.
The auto insurance deficit is attributed to premiums having fallen by 1 to 2 percentage points each year over the past four years. Even last year, there were calls for a premium increase, but premiums were ultimately cut due to inflation pressures.
The insurance industry says an auto insurance premium hike is unavoidable. In a conference call announcing third-quarter results, Samsung Fire & Marine Insurance said, "We are reviewing a plan to raise next year's premiums in light of the combined ratio level."