380 billion won deficit despite the premium increase last year Deficit for 10 years 7.4 trillion
Mr. S (47), an employee of a financial company, did not receive a renewal notice from the insurance company, unlike other years, even though the auto insurance maturity is imminent.
When I made a phone call to the call center on the weekend, a guide came out saying that I only answer emergency calls on weekends.
I tried to update myself online because I was frustrated, but the disability continued and the insurance premium was not paid.
Since he couldn’t drive without insurance, Mr. S had no choice but to transfer his auto insurance to another insurance company.
Mr. S said, “I felt that auto insurance customers don’t care if they move to another company because they are not profitable.”
In fact, company A, a non-life insurance company that S gave up on renewal, has cut its auto insurance market share in half over the past two years.
According to Mr. S’s experience, it is reported that many customers are not active in renewing, but also apply a high premium increase rate when renewing vehicles that are concerned with high insurance payments such as foreign cars.
An official in the non-life insurance industry said, “Because the auto insurance deficit is so serious, Company A has chosen a strategy to overcome the auto insurance contract and reduce the loss.” It is a way to manage the loss ratio (the ratio of insurance premiums to insurance premiums) and stop auto insurance marketing such as advertising.”
If the loss ratio management is strengthened, even if the company does not raise the insurance premium as a whole, the insurance premium for old or foreign vehicle owners will rise sharply when renewing.
The auto insurance reduction strategy has already proved’effective’ in the non-life insurance industry by proactively promoting the mid-to-higher company B ahead of Company A.
As Company B tightened its rein in managing the auto insurance loss ratio, its market share fell from 5% to 3% over the past five years, and during this period, auto insurance alone saw the effect of reducing the operating deficit by more than 100 billion won.
Accordingly, the auto insurance market share of the four major non-life insurance companies, including Samsung Fire & Marine Insurance, Hyundai Marine & Marine Insurance, DB Insurance, and KB Insurance, is increasing.
The market share of these four non-life insurers in terms of raw premiums (income from premiums) increased from 80.3% at the end of 2018 to 84.3% as of the third quarter of last year.
According to the non-life insurance industry on the 7th, the cumulative operating deficit of auto insurance from 2011 to last year amounted to 7.4 trillion won.
In 2019 alone, auto insurance lost 1.6 trillion won.
Despite the increase in insurance premiums last year and a decrease in traffic due to the novel coronavirus infection (Corona 19), the deficit was estimated to be 380 billion won.
If traffic returns to pre-Corona 19 levels with this year’s vaccination, the deficit is likely to snowball again.
This is because insurance per accident continues to increase.
Another person in the non-life insurance industry said, “If the auto insurance deficit structure continues, the trend of strengthening loss ratio management will intensify and the pressure to increase insurance premiums will increase.” “He said.
[표] Changes in loss per accident (insurance expenditure) by year
┌────────────┬────┬────┬────┬────┬────┐
│ Category │ ’17 │ ’18 │ ’19 │ ’20 │’February 1 │
├——–┬——┼—-┼—-┼—-┼—-┼—-┤
│ │ Adult│ KRW 2.57 million│ KRW 2.45 million│ KRW 2.7 million│ KRW 2.99 million│ KRW 3.05 million│
│ per accident │ │ │ (-4.7%)│ (10.2%)│ (10.7%)│ │
│ Amount of damage ├——┼—-┼—-┼—-┼—-┼—-┤
│ │ Daemul│ KRW 1.15 million│ KRW 1.24 million│ KRW 1.34 million│ KRW 1.45 million│ KRW 1.57 million│
│ │ │ │ (7.8%)│ (8.1%)│ (8.2%)│ │
└──────┴─────┴────┴────┴────┴────┴────┘
Data, industry collection.
/yunhap news