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Loss rate for auto insurance jumps in Q3 on heatwave

Non-life insurers' loss rate for their auto insurance businesses jumped in the third quarter, as a prolonged stretch of hot weather led to a raft of claims, data showed Monday.

The nation's 11 non-life insurers posted an average loss rate of 87.6 percent in the third quarter, compared with 80.7 percent a quarter earlier, according to the data by the Financial Supervisory Service.


(Yonhap)
(Yonhap)

The loss rate refers to the proportion of coverage a non-life insurer pays to its policyholders from insurance premiums. The higher the loss rate is, the more likely the insurer will go into the red.

Hit by the jump in loss rate, the non-life insurers reported a combined operating loss of 198.8 billion won in the third quarter, the FSS said.

In the first nine months of this year, they posted a combined operating profit of 210.4 billion won, compared with a profit of 243.7 billion won for the same period last year.

South Korea's auto insurance market has contracted, pressured by intensifying competition and lower premiums.

According to the Korea Insurance Development Institute, 20.5 percent of the nation's 15.4 million car insurance policyholders filed their applications through cyber marketing channels, such as smartphones and computers, in June last year.

The number was up from 15.5 percent a year earlier. Of the online subscribers, 69.4 percent purchased insurance via computers, with the remainder applying through smartphones. (Yonhap)

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