Last year, the loss ratio for automobile insurance worsened, leading to an operating loss for automobile insurance for the first time in four years.
According to the '2024 automobile insurance business performance (provisional)' announced by the Financial Supervisory Service on Feb. 6, the revenue from automobile insurance (gross premium) last year was 20.6641 trillion won, a decrease of 1.8% compared to the previous year (21.0484 trillion won). The continuous decrease in automobile insurance premiums had a significant impact. The average automobile insurance premium dropped from 723,434 won in 2022 to 717,380 won in 2023 and to 691,903 won in 2024.
While the revenue from automobile insurance decreased, the number of accidents increased, leading to a deterioration in the insurance profitability for the institutional sector of automobiles. Last year, the combined ratio for the automobile institutional sector (loss ratio + expense ratio) exceeded the break-even point of 100%, recording a loss of 9.7 billion won. This marks the first operating loss since 2020.
The expense ratio for automobile insurance slightly improved, but the loss ratio worsened. The expense ratio decreased by 0.1 percentage points to 16.3%, down from 16.4% the previous year. On the other hand, the loss ratio increased by 3.1 percentage points to 83.8%, up from 80.7% the previous year.
However, last year, the investment income from automobile insurance recorded a profit of 598.8 billion won, resulting in a total profit of 589.1 billion won from automobile insurance.
The market share of major companies (Samsung, Hyundai, KB, DB) maintained a level of 85.3%, consistent with the previous year. The market share of small and medium-sized companies (Meritz, Hanwha, Lotte, MG, Heungkuk) fell by 0.1 percentage points to 8.3%. The market share of non-face-to-face specialists (AXA, Hana, Carrot) rose by 0.1 percentage points to 6.4%.
The FSS noted, 'There is a possibility that the loss ratio may worsen due to the cumulative effect of recent premium reductions and a 2.7% increase in repair costs this year,' adding, 'We will implement follow-up measures such as revising insurance clauses to ensure the automobile insurance fraud improvement measures announced in February take hold, and we will support measures to stabilize the loss ratio.'