Car insurance premium increase. Yonhap News. 

With cumulative deficits in auto insurance, non-life insurance companies are already contemplating premium increases for next year.

While the situation is so severe that Samsung Fire & Marine Insurance, the industry leader, has uncharacteristically officially announced a review of premium hikes, factors such as auto insurance premium increases leading to increased consumer price burdens are expected to play a role.

Adjustments to next year's auto insurance rates are anticipated to occur around February to March of next year.

According to the non-life insurance industry on the 16th, the cumulative loss ratio for the four major non-life insurance companies (Samsung, Hyundai, DB, KB) from January to September this year was 85.4%, a 4.3 percentage point (p) increase compared to the same period last year.

The combined ratio, including the expense ratio (16.3%), is 101.7%, exceeding the break-even point (100%) and indicating a deficit.

The loss ratio reached the break-even point as of the cumulative figures in July.

Considering that the loss ratio typically rises at the end of the year, the industry estimates that the cumulative loss ratio for this year will reach 87-88%, and the combined ratio will be around 103-104%.

Amidst this, Samsung Fire & Marine Insurance announced during its third-quarter earnings conference call that it is "reviewing premium increases for next year."

Samsung Fire & Marine Insurance's third-quarter auto insurance operations resulted in a deficit of 64.8 billion won, and the cumulative loss for this year stands at 34.1 billion won. Samsung Fire & Marine Insurance's cumulative auto insurance combined ratio for the third quarter of this year is 100.8%.

The situation is similar for other major companies.

Hyundai Marine & Fire Insurance [001450] recorded a loss of 55.3 billion won in its third-quarter auto insurance, turning to a deficit for the first time in five years.

DB Insurance [005830] also saw its third-quarter profits decrease by 55.8 billion won from the previous quarter, and its cumulative profit fell by 87.9% year-on-year to 21.8 billion won.

An official from the insurance industry stated, "Last year, some major non-life insurance companies made a profit in auto insurance, but this year, all of them will incur losses due to high loss ratios. Samsung Fire & Marine Insurance's announcement of the need for premium increases means that their burden is that significant."

Clouds over the insurance industry. Yonhap News. 

Financial authorities are also taking the rise in loss ratios this year seriously, but it is expected that they will consider consumer backlash and the impact of price increases.

Auto insurance premiums are set autonomously by insurers, but due to the mandatory nature of the coverage, which has significant repercussions and directly affects prices, they are subject to consultation with financial authorities.

Auto insurance premiums have been reduced for four consecutive years: ▲ 1.2-1.4%p in 2022 ▲ 2.0-2.1% in 2023 ▲ 2.5-2.8% in 2024 ▲ 0.6-1%p in 2025.

Although the need for an increase was discussed last year, it was ultimately reduced due to reasons such as inflationary pressures.

An official from a small and medium-sized insurance company said, "Although premiums need to be increased due to the growing deficit, we have no choice but to proceed cautiously as it is linked to the consumer price index and consumer reactions must also be taken into account."

Some speculate that in a highly competitive market, some companies will relatively modestly increase their premiums to expand their market share.

An insurance company official predicted, "There are factors that will increase compensation for injuries and property next year, and the high loss ratio makes reductions unlikely. The rate of increase may vary by company."

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