The unprecedented rainfall in Korea to land hard on nonlife insurers on soaked cars

[Photo by Yonhap]

The heaviest rainfall in nearly a century wrecking havoc in the central region after swamping capital region would hit hard on Korea’s non-life insurers including No. 1 Samsung Fire & Marine Insurance Co. (SFMI) as they must cover for the thousands of drenched cars in the posh neighborhoods of Seoul.

According to multiple sources from the non-life insurance industry on Thursday, SFMI has received claims for 2,946 water-damaged cars from Aug. 8 to 10 as of 3 p.m., resulting to an estimated loss of 47.6 billion won ($36.6 million). The claims surged after the torrential rain inundated the capital’s affluent Gangnam and Seocho areas in southern Seoul.

Of the vehicles, 1,804 were domestic cars with losses amounting to 17.8 billion won and 1,142 import cars with losses totaling 29.8 billion won.

The losses from vehicle damages surged because affluent Gangnam area with many luxurious super cars had been bombarded by floods, said an unnamed official from the non-life insurance industry. “The losses have doubled the usual wet season,” the person added.

[Source: Samsung Fire & Marine Insurance Co.]

SFMI’s car insurance loss ratio reached 76.3 percent in the first six months of this year and 77.0 percent in June alone, but it is expected to exceed 80 percent in August due to this week’s heavy downpour, the heaviest in nearly a century. The 80 percent loss ratio is considered the break-even point of auto insurances when non-life insurers review operation costs.

SFMI on Thursday disclosed that its net profit was up 0.8 percent on year to 749.9 billion won in the January-June period. The non-life insurer’s bottom line in the second quarter gained 9 percent on year but fell 16.7 percent on quarter to 340.8 billion won. Operating profit was up 8.4 percent on year but down 16.3 percent on quarter to 490.1 billion won. Revenue gained 1.8 percent on year and 2.4 percent on quarter to 5 trillion won.

Other major non-life insurers would likely see spike in loss ratios as well, which could translate into a rise in overall auto insurance fees in the country.

DB Insurance has received claims for 1,638 damaged cars between Aug. 8 to 10 as of 4:40 p.m., resulting to 20.2 billion won in losses. More than 500 were import cars.

Hyundai Marine & Fire Insurance also faces 11.54 billion won in losses from 1,284 vehicles claimed between Aug. 8 and 10 as of noon. Of them, 292 were import cars with losses totaling 5.17 billion won.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]