Insurers suffer 1st losses in 6 yrs from auto insurance biz in H1

Insurance companies in South Korea reported their first loss from auto insurance in six years during the first half of the year, according to preliminary data released by the Financial Supervisory Service (FSS) on Tuesday. The combined profit for 12 insurance firms offering car insurance amounted to 238 billion won (US$177 million) from January to June, marking a significant decline of 37.7 percent compared to the same period last year, when the net profit was 382 billion won. The profit figures also include gains from investment returns.

The auto insurance segment experienced a net loss of 185 billion won in the first half, marking the first such loss in six years. Investment returns rose by 20.2 percent year-on-year to 423 billion won during the same period. The average loss rate for the insurers stood at 84.9 percent in the first half, a 1.6 percentage point increase from the previous year.

The loss rate represents the proportion of coverage that non-life insurers pay to policyholders from insurance premiums, with a higher rate indicating a greater likelihood of the insurer incurring losses. The primary cause of the insurers' losses from auto insurance was attributed to rising insurance-related costs, while the number of accidents decreased by 4.5 percent year-on-year to 1.74 million during the cited period.