South Korean non-life insurers are moving to raise premiums for motor policies by around 5% against ballooning losses from the auto insurance business.
According to industry sources, seven non-life insurers – KB Insurance, Hyundai Marine & Fire Insurance, Samsung Fire & Marine Insurance, DB Insurance, Meritz Fire & Marine Insurance, Lotte Insurance and Hanwha General Insurance – filed for an increase in their auto insurance rates to the Korea Insurance Development Institute on 25 November.Major players reportedly submitted a plan for a 4-5% rise, and smaller firms a 5-6% increase, reported Pulse News.The review process for approval of premium increases usually takes up to two weeks. The new rates could be imposed in the New Year.Insurers cited their higher loss ratio as the main reason for the rate hike. The loss ratio of local insurance companies hit 90% in November. Auto insurers consider 80% as the optimal ratio.Non-life insurers incurred an operating loss of KRW824bn ($691bn) from auto insurance for the first nine months of this year, a year-on-year increase of 303.1%. The surge in the operating loss was attributed to increases in repairs & maintenance costs and insurance production costs.The insurers had hiked their premiums last June after having raised them a few months earlier in January.