Korean non-life insurers to cut car insurance fees by up to 3%

South Korean non-life insurers are expected to slash car insurance fees by up to 3 percent in response to the government’s request on their role in social contribution.

According to sources from the financial authority and non-life insurance industry on Monday, local auto insurers have recently delivered their opinions on lowering premiums to the government.

Sources noted that the insurers are capable of lowering premium fees by an average of 1.6~1.8 percent given the loss ratio.

They, however, plan to expand the cut upon the government’s emphasis on the industry’s social contributions.

Major auto insurers, including Samsung Fire & Marine Insurance Co, Hyundai Marine & Fire Insurance Co., KB Insurance Co., and DB Insurance Co. are known to have proposed a 2.4~2.5 percent cut in auto premium fees. The top non-life insurers accounted for 82.5 percent of the country’s auto insurance market as of the first half of this year.

Meritz Fire & Marine Insurance is willing to cut the fees by 2.9~3 percent.

“Based on the updated recommendation from the industry, the financial authorities will issue guidance for the industry,” said an industry official.

Insurers can afford lower auto premiums, given the auto insurance loss rates observed this year, analysts said.

As per the insurance industry data, the average auto insurance loss ratio for the four major insurers stood at 78.6 percent from January to October, down 1.9 percentage points from the same period last year.

In 2022, major insurers implemented a 2 percent cut in auto insurance rates, with Lotte Non-Life Insurance making a more significant cut of 2.9 percent.

The insurance industry projects that a 1 percent cut in auto premiums would result in a decrease in insurance income amounting to 200 billion won ($153 million).