Auto insurance premiums are expected to rise by the low-to-mid 1% range starting next year. The surge in recent loss ratios is the reason.
According to financial authorities and the insurance industry on the 28th, the four major companies, including Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance, completed requests to the Korea Insurance Development Institute for auto insurance rate verification by the 26th.
Most non-life insurers are said to have proposed an increase of around 2.5%.
However, in consultations with the financial authorities and others, an increase in the low-to-mid 1% range is said to be under strong consideration. The current likely increase is around 1.3–1.5%.
With the Korea Insurance Development Institute's rate verification expected to be completed between January and February next year, the changes are forecast to be applied to actual premiums in stages starting around February.
Under pressure from the authorities for shared-growth finance, non-life insurers lowered auto insurance premiums by 1.2–1.4% in 2022, 2.0–2.5% in 2023, 2.1–3.0% in 2024, and 0.6–1% this year.
Auto insurance premiums are set autonomously by non-life insurers. However, because auto insurance is a mandatory policy with 25 million policyholders, it directly affects daily life and inflation, so it is coordinated with the financial authorities.
The industry says the burden from loss ratios has reached its limit, as premiums have been cut four years in a row and the loss per accident has increased. As of November this year, the auto insurance loss ratio of the four major companies (simple average) stood at 92.1%, exceeding 90%.
The cumulative loss ratio for January–November was 86.2%, up 3.8 percentage points from the same period a year earlier. Generally, an 80% loss ratio is considered the break-even point for auto insurance.