Up to 5% increase in car insurance premiums… Increased repair and medical expenses

Enter 2021.03.27 06:00

Following the increase in real-loss insurance premiums, called national insurance, even auto insurance premiums, which are compulsory insurance, are showing signs of an increase. Recently, premiums have been raised mainly by small and medium-sized insurance companies with high loss ratios. As maintenance costs and medical expenses, which have a significant impact on car insurance costs, increase, insurance premiums may rise by up to 5% or more.

According to the insurance industry on the 27th, MG Non-life Insurance recently increased personal auto insurance premiums by an average of 2%. The 2% increase rate is the average rate of increase based on the total premium income. Lotte Insurance, Carrot Insurance, and Aksa Insurance are also set to raise their premiums soon. In particular, Carrot Insurance is discussing a plan to raise the 5% range.

Initially, the outlook prevailed in the insurance industry that an increase in auto insurance premiums would not be discussed. This is because last year’s new coronavirus infection (Corona 19) led to a decrease in vehicle traffic and a decrease in the accident rate. However, when I opened the lid, the loss ratio of small and medium-sized non-life insurers exceeded the appropriate value. The industry sees an appropriate loss ratio for auto insurance at 78-80%.

The MG Insurance Division decided to increase the premium this time. Lotte Insurance (000400), Carrot Insurance and Aksa Insurance’s loss ratios were particularly high. The loss ratio of MG Insurance was the highest in the industry at 107.7% last year. The loss ratio of Lotte Insurance and Aksa Insurance also surpassed 90%. The loss ratio differed from company to company depending on project expenses and insurance payment review capabilities.

Four major non-life insurance companies with over 80% market share (Samsung Fire & Marine Insurance (000810), Hyundai Maritime (001450), KB Insurance, DB Insurance (005830)) Last year’s auto insurance loss ratio was in the mid-80% range, lower than in 2019, when it exceeded 90%. However, as small and medium-sized insurers are raising their premiums one after another, large insurers are also wondering if they should raise their premiums. This year’s auto maintenance fee hike is being promoted.

Recently, the automobile maintenance industry submitted a proposal to the Ministry of Land, Infrastructure and Transport requesting an 8.2% increase in maintenance fees. It has been 3 years since 2018 for the maintenance industry to push for a maintenance fee increase. In 2018, compared to 2010, when the previous increase was made, it has increased by about 20%, but on an annual average, the proposed increase is similar at 2-3%.

In 2019, the year following the increase in maintenance fees, non-life insurers recorded a loss of 1.64 trillion won. The deficit for 10 years from 2009 to 2018 was about 7 trillion won (72.3 billion won in 2018), but in 2019 it was twice the average of the year. Last year’s deficit is estimated at 380 billion won. The industry predicted that an 8.2% increase in maintenance fees could increase auto insurance premiums up to 5%, depending on the insurance company.

The continued increase in medical expenses is also a factor in the premium increase. According to the non-life insurance industry, the amount paid per car accident from 2019 to 2020 increased by 10.7% from 2.7 million won to 2.99 million won for an individual, and 8.2% from 1.34 million won to 1.45 million won for property. The insurance industry believes that the increase in medical care for traffic accident patients has had an effect on the increase in insurance payments.

An insurance company official who requested anonymity said, “In the situation where the auto insurance deficit continues, insurance companies are bound to react sensitively to an increase in maintenance fees. There is,” he said.